REG - FIH Group PLC - Final Results
07/08/2023 07:00
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RNS Number : 4263I FIH Group PLC 07 August 2023
FIH group plc
("FIH" or the "Group")
Final Results
FIH, the AIM quoted international specialist services group with businesses in
the Falkland Islands and the UK, is pleased to announce the Group's audited
results for the year ended 31 March 2023 ("the period").
Highlights
· Revenue up 31% to £52.7 million (2022: £40.3 million) and
underlying pre-tax profit up 39% to £3.2 million (2022: £2.3 million), with
improvements in all divisions.
· Pre-tax profit of £4.0 million (2022: £2.7 million as
restated*) including non-trading items.
· Net cash flow from operating activities up 47% to £7.5 million
(2022: £5.1 million).
· Underlying earnings per share of 20.1p (2022: 9.5p).
· Strong balance sheet at 31 March 2023 with cash up £3.2 million
to £12.8 million (2022: £9.6 million) and net debt (cash and cash
equivalents less bank loans) improving by £4.1 million to £0.5 million
(2022: £4.6 million).
· A final dividend of 5.3 pence per share will be proposed at the
Annual General Meeting, taking the total dividend for the year to 6.5 pence
per share (2022: 3.0 pence per share).
* As detailed in note 1 to the financial statements.
Board and Governance
· Reuben Shamu appointed as Chief Financial Officer on 12 September
2022.
· Jeremey Brade stepped down as a non-executive director on 21
September 2022.
· Holger Schröder appointed as a non-executive director on 1 June
2023.
· Robin Williams to step down as Chairman at the Company's AGM in
September 2023.
Stuart Munro, Chief Executive, said:
"I'm delighted to be able to present a strong set of results which are
underpinned by an equally strong cash performance, signalling a good recovery
from the pandemic and resilience to the cost of living pressures which have
impacted all sectors of the business."
Enquiries:
FIH group plc
Stuart Munro, Chief Executive Tel: 01279 461630
Reuben Shamu, Chief Financial Officer
WH Ireland Ltd - NOMAD and Broker to FIH
Chris Fielding / James Bavister Tel: 0207 220 1666
Novella Communications
Tim Robertson / Chris Marsh Tel: 020 3151 7008
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
The person responsible for arranging the release of this announcement on
behalf of the Company is Stuart Munro Chief Executive Officer of the Company.
Chairman's Statement
I am pleased to report a year of solid performance with record revenues for
the Group and earnings growth in all three divisions, delivering an underlying
pre-tax profit of £3.2 million.
This is due in no small part to the Group's employees and I would like to take
this opportunity to thank each of them for their contribution to such a strong
improvement in performance.
The balance sheet remains strong, with cash of £12.8 million at 31 March 2023
(2022 £9.6 million) and net debt (cash and cash equivalents less bank loans)
improving by £4.1 million to £0.5 million (2022: £4.6 million).
Dividend
Following the payment of an interim dividend of 1.2 pence per share paid in
January 2023 and reflecting the continued improvement in trading since the
half year, I am pleased to announce that a final dividend of 5.3 pence per
share will be proposed at our forthcoming Annual General Meeting. This will
take the total dividend paid for the year ended 31 March 2023 to 6.5 pence per
share (2022: 3.0 pence per share).
Board and Governance
On 12 September 2022, Reuben Shamu was appointed as Chief Financial Officer
and on 21 September 2022, Jeremy Brade stepped down from his position as
non-executive director of the Group.
Holger Schröder was appointed as a non-executive director of the Group on 1
June 2023. Holger has over 28 years' experience gained in a variety of
predominantly Swiss companies, most recently as the CFO and a board member of
Janser Group which controls 12.6% of the Company's equity. His experience and
business knowledge will be of great benefit and the strengthening of
shareholder representation on the Board should add further support to the
Group's strategic direction.
As announced on 24 February 2023, I will not be seeking re-election to the
Board at the Company's AGM in September. The Board is considering options for
its constituent members, including the recruitment of an additional
independent non-executive director, and will make an announcement in due
course.
Outlook and Strategy
Despite difficult trading conditions, performance has continued to progress,
giving confidence that the Group strategy, as detailed in the CEO's Strategic
Review, is on course. Increased focus can now be brought to bear on
opportunities to invest in further developing the Group's existing businesses
and on potential complementary strategic acquisitions that either strengthen
existing operations or provide improved growth opportunities.
Robin Williams
Chairman
4 August 2023
Chief Executive's Strategic Review
Overview
The progress demonstrated in the Group's first half results continued in the
traditionally stronger second half of the year.
Total revenue of £52.7million was a record for the Group and 31% ahead of the
prior year. Trading in all three divisions and across all their business
sectors continued to improve, resulting in an overall underlying profit before
tax of £3.2 million, circa 39% ahead of the prior year and an underlying
earnings per share of 20.1p (2022: 9.5p). Pre-tax profit was £4.0 million
(2022: £2.7 million following restatement as detailed in note 1 to the
financial statements).
The Group results were underpinned by a net cash flow from operating
activities of £7.5 million, which included a £1.4 million improvement in
working capital.
Group Trading Results for the Year Ended 31 March 2023
A summary of the trading performance of the Group is given in the table below.
Group revenue 2023 2022 Change
Year ended 31 March £m £m %
Falkland Islands Company 29.4 21.6 36.6%
Momart 19.5 15.6 25.0%
Portsmouth Harbour Ferry 3.8 3.1 22.6%
Total revenue 52.7 40.3 31.0%
Group underlying pre-tax profit* £m £m %
Falkland Islands Company** 1.9 1.8 5.6%
Momart** 1.0 0.6 66.7%
Portsmouth Harbour Ferry** 0.3 (0.1) 400%
Total underlying pre-tax profit * 3.2 2.3 39.1%
Non-trading items (see notes below)*** 0.8 0.4 100.0%
Reported profit before tax 4.0 2.7 48.1%
* Underlying pre-tax profit is defined as profit before tax before non-trading
items.
** As in prior years, the profits reported for each operating company are
stated after the allocation of head office management and plc costs which have
been applied to each subsidiary on a consistent basis.
*** Non-trading items were comprised of:
(i) Favourable fair value movements on the non-effective portion of
derivative financial instruments used to hedge interest rate fluctuations of
£0.9 million (2022: £0.7 million).
(ii) £0.1 million of employee redundancy costs in the current year and
£0.3 million of people-related costs in the prior year, including employee
redundancies and compensation payable to the former Chief Executive.
Management consider that separate presentation of these items is appropriate
to facilitate year on year comparison of performance of the Group.
Group Operating Company Performance
Falkland Islands Company ("FIC")
Total revenue increased by 36.6% to £29.4 million, with improvements across
all sectors of the division. Falkland Business Services ("FBS") was the
predominant growth area, driven by the £17.3 million housing contract to
construct seventy houses for the Falkland Islands Government ("FIG") and the
UK Ministry of Defence ("MOD") secured in November 2021.
The ban on tourists entering the Falkland Islands was lifted in May 2022 and
Stanley once again welcomed visitors arriving on cruise ships in the austral
summer season. Over 59,000 tourists visited (2022: nil), despite some vessels
cancelling their visits at short notice due to changeable weather conditions.
Whilst the retail environment continued to be challenging, the strong tourist
season, combined with targeted price increases, resulted in a recovery in
retail revenue compared to the year on year revenue reduction experienced in
the first half of the year.
The overall underlying pre-tax profit for FIC of £1.9 million was 5.6% ahead
of the prior year, albeit at a reduced level of profit margin, due largely to
the mix and proportion of FBS activity.
FIC Operating Results
Year ended 31 March 2023 2022 Change
£m £m %
Revenues
FBS (housing and construction) 12.1 5.8 112.1
Retail 9.9 9.7 2.1
Falklands 4x4 3.1 2.8 10.7
Support services 3.3 2.5 32.0
Property rental 1.0 0.8 25.0
Total FIC revenue 29.4 21.6 36.6
FIC underlying operating profit 2.0 1.9 5.3
Net interest expense (0.1) (0.1) -
FIC underlying profit before tax 1.9 1.8 5.6
FIC underlying operating profit margin 6.4% 8.3% (23.0)
FIC Divisional Activity
FBS revenue increased by 112.1% driven mainly by the £17.3 million contract
to build a total of 70 houses for FIG and the MOD. The first 10 houses were
handed over at Bennetts Paddock in Stanley for FIG and 5 at Mount Pleasant
Camp for the MOD. Circa £1.9 million of variation orders have been received
on this contract, including the construction of a road providing easier access
to the housing units under construction. Other orders included the
construction of a wool storage warehouse for the Falkland Islands Development
Corporation, which is due to be completed by the end of 2023. £1.4 million of
the orders were received after the balance sheet date.
Retail was impacted by global inflationary pressures which drove increases in
both product prices and freight costs, as well as having an adverse impact on
the disposable income of Falklands Islands residents. A strong performance
from tourist sales driven by an increase in visitors, offset shortfalls in
locally-derived business, resulting in a small increase in revenue.
At Falklands 4x4, the sale of new and used vehicles remained stable, albeit
with a change in mix with a greater proportion of quad and motor bike sales.
The increase in revenue came from an increase in vehicles rentals and the sale
of spare parts. Falklands 4x4 has become an authorised distributor of the new
Ineos Grenadier 4x4 vehicle and first deliveries are expected in 2023.
In Support Services, the revenue increase arose mainly in Penguin Travel,
FIC's tourism business, where the arrival of tourists saw revenue increasing
three-fold on the prior year. Cruise ship capacity for next summer season
shows further potential growth opportunities, with circa 100,000 tourists
expected between late September and mid-March 2024.
In Rental Properties, improving occupancy and a small increase in the number
of units in the property portfolio resulted in revenue of £1 million, which
was £0.2 million above the previous year. The market place remains buoyant,
with potential new tenants waiting for units to become available.
FIC Key Performance Indicators and Operational Drivers
Year ended 31 March 2019 2020 2021 2022 2023
Staff numbers (FTE 31 March)* 175 214 206 232 242
Capital expenditure £'000 2,348 2,685 1,060 2,434 1,206
Retail sales growth % +5.7 +3.1 -3.0 -0.1 +2.1
Number of FIC rental properties** 54 65 75 83 85
Average occupancy during the year % 84 89 93 86 90
Number of vehicles sold 76 71 71 81 82
Number of 3(rd) party houses sold*** 6 22 15 11 14
Illex squid catch in tonnes (000's) 57.4 57.6 106.1 123.8 66.8
62.5 72.1 Nil Nil 73.4
Cruise ship passengers (000's)
* Restated to include FIC staff in the UK.
**Includes ten mobile homes rented to staff.
***Relates to kit home sales to third parties and excludes houses built under
contract for FIG.
Momart
Revenue of £19.5 million was £3.9 million (25%) ahead of the prior year with
improvements across all sectors of the business.
The strong growth in Museum Exhibitions was pleasing given that the sector is
still recovering from the impact of Covid-19, both in terms of exhibition
funding and visitor numbers. It reflects a steady pattern of project winning
and an increasing number of smaller un-tendered one-off projects.
Gallery Services also showed significant progress, assisted by a broadening
and deepening of existing client relationships and new client wins.
The improvement in Storage revenue was driven by a combination of an
improvement in fill rate and price increases. Encouragingly, a number of
long-standing clients have indicated their intention to continue and expand
their use of Momart's storage facilities.
The improvements across all sectors resulted in an underlying pre-tax profit
of £1.0 million (2022: £0.6 million) with margin improvements from a higher
volume of work relative to the fixed cost base, combined with better
utilisation of staff.
Momart Operating Results
Year ended 31 March 2023 2022 Change
£m £m %
Revenues
Museum Exhibitions 9.5 7.4 28.4
Gallery Services 7.3 5.8 25.9
Storage 2.7 2.4 12.5
Total Momart revenue 19.5 15.6 25.0
Momart underlying operating profit 1.4 1.0 40.0
Net Interest expense (0.4) (0.4) -
Momart underlying profit / (loss) before tax 1.0 0.6 66.7
Momart underlying operating profit margin 5.1% 3.8% 33.3
Momart Key Performance Indicators
Year ended 31 March 2019 2020 2021 2022 2023
Staff numbers (FTE 31 March) 110
140 133 107 99
Capital expenditure £'000's 20,034 638 540 258 1,087
Warehouse % fill vs capacity 81.1% 86.9% 82.9% 84.0% 86.4%
Momart services charged out £11.5m £10.8m £6.5m £9.1m £10.8m
Revenues from overseas clients £7.5m £6.2m £2.7m £5.5m £6.7m
Exhibitions sales growth -6.5% -2.1% -58.3% 64.4% 28.4%
Gallery Services sales growth 4.0% -22.4% -41.4% 70.6% 25.9%
Storage sales growth -6.3% 5.8% 9.1% 0.0% 12.5%
Total sales growth -2.9% -8.7% -45.5% 51.5% 25.0%
Portsmouth Harbour Ferry Company ("PHFC")
Passenger numbers at PHFC continued to recover, resulting in an overall
passenger volume for the year of 80% of pre-COVID levels compared to 70% in
the prior year. Along with careful management of costs and
inflation-mitigating fare rises, this resulted in an underlying pre-tax profit
for the first time since the pandemic.
PHFC Operating Results
Year ended 31 March 2023 2022
Change
£m £m %
Revenues
Ferry fares & other revenue 3.8 3.1 22.6
Total PHFC revenue 3.8 3.1 22.6
PHFC underlying operating profit / (loss) 0.6 0.2 200
Pontoon lease liability & Boat loan finance expense (0.3) (0.3) -
PHFC underlying profit / (loss) before tax 0.3 (0.1) 400
PHFC Key Performance Indicators and Operational Drivers
Year ended 31 March 2019 2020 2021 2022 2023
Staff numbers (FTE at 31 March) 37 36 25 26 26
Capital expenditure £'000's 50 65 - 52 218
Ferry reliability (on time departures) 99.8 99.8 99.9 99.9 99.8
Number of weekday passengers '000's 1,834 1,706 613 1,188 1,372
% change on prior year -2.3 -7.0 -64.1 93.8 15.4
Number of weekend passengers '000's 722 659 195 500 576
% change on prior year -1.6 -8.7 -70.4 156.4 15.2
Total number of passengers '000's 2,556 2,365 808 1,688 1,948
% change on prior year -2.1 -7.5 -65.8 108.9 15.4
Revenue growth % 0.4 -5.5 -65.9 114.2 19%
Average yield per passenger journey* £1.62 £1.69 £1.76 £1.76 £1.91
*Total ferry fares divided by the total number of passengers
Trading Outlook
The overall trading outlook for the Group remains positive.
In FIC, the return of tourism to the Falkland Islands should continue to boost
both direct and indirect revenues across a number of business sectors, which
should help to mitigate the challenges of the current global economic
crisis. This, combined with a continued strong order book in FBS and the
potential for new contracts with the MOD and FIG, bodes well for the future.
At Momart, the market, continues to recover and a renewed focus on actively
developing business with both existing and prospective clients should continue
to yield growth opportunities for the business.
PHFC returned to profit, albeit passenger numbers are not yet back to
pre-COVID levels, which is consistent with other analogous UK transport
providers. Available capacity means that future passenger growth can be
accommodated without a commensurate increase in cost, which would further
improve profitability. However, costs and fare pricing will continue to be
carefully managed.
The challenge of the global economic crisis remains, but the progress
delivered to date, an ongoing focus on pricing and cost control and the
strength that the Group's geographical breadth and diversity of operations
brings, gives confidence for the future.
Group Strategy
The aim of the Board is to build a Group of greater scale, providing
consistent earnings growth and cash generation that will provide shareholders
with both predictable capital growth and regular dividend income. To deliver
this, the Group strategy has three key strands:
Build the profits of the existing businesses back to and beyond the pre-COVID
position. As evidenced by the improved results delivered across all divisions,
good progress was made during the year, but more remains to be done.
Invest in developing the existing businesses. The Board continues to be
focussed on capitalising on potential opportunities for further work for FIG
and the MOD, building on the £17.3 million housing contract awarded in
November 2021. During the year, additional work was awarded under this
contract, including the construction of a road adjacent to the houses being
constructed at the Mount Pleasant Camp. In addition, potential opportunities
to maximise returns from existing FIC land assets are being explored. The
potential for additional opportunities arising from the development of the Sea
Lion oil field continues to be monitored closely. However, the Board does not
rely in its planning on any such development due to the uncertain and lengthy
timescales involved and the undefined nature of any benefit which might accrue
to FIC.
Explore the potential for strategic acquisitions. This could provide a step
change in the scale of FIH, but acquisitions will only be considered if they
either add to existing activities or bring growth potential from other
attractive sectors, can be secured at an appropriate price and are within the
capacity of the senior executive team to integrate and optimise without
negatively impacting the performance of the existing businesses. A number of
opportunities were reviewed during the year, but none met the required
criteria.
Risk Management, Principal Risks and Impact
The Board is ultimately responsible for setting the Group's risk appetite and
for overseeing the effective management of risk. The Group faces a diverse
range of risks and uncertainties which could have an adverse effect on results
if not managed. The principal risks facing the Group have been identified by
the Board and the mitigating actions agreed with senior management and are
discussed in the following table:
OPERATIONAL RISKS
Risk Comment Overall Impact
PANDEMIC Whilst the prevalence and severity of the impact of COVID continues to Low - decreased
diminish, other similar future virus outbreaks cannot be discounted.
Failure to respond in time to the impact of a future pandemic may result in
disruption to the Group's operations through staff absenteeism, disruption to
supply chains and the logistics the Group's businesses rely on to deliver
products and services to customers. A watching brief will be maintained, utilising previous learning to assess the
impact of potential virus outbreaks on operations should they arise, and to
determine appropriate mitigating actions.
CYBER RISK There is a growing level of sophistication, scale and volume of targeted cyber Moderate - new
incidents which could impact on group trading and potential loss of assets.
A cyber security breach can result in unauthorised access to company
information, potential misuse of information systems, technology or data.
A full review of the IT security environment has been commissioned to
modernise prevention measures across the Group.
DATA PRIVACY Governance and oversight protocols are regularly reviewed to maintain Low - new
vigilance in protection of the Group's customer and staff data.
Failure to comply with legal or regulatory requirements relating to data
privacy in the course of business activities potentially leading to adverse
consequences, penalties or consequential litigation.
HEALTH AND SAFETY Health & Safety ("HSE") matters are considered a key priority for the Low - unchanged
Board of FIH and all its operating companies.
The Group is required to comply with laws and regulation governing
occupational health and safety matters. Furthermore, accidents could happen
which might result in injury to an individual, claims against the Group and
damage to our reputation. All staff receive relevant HSE training when joining the Group and receive
refresher and additional training as is necessary. Training courses cover
maritime safety, lifting and manual handling, asbestos awareness and fire
extinguisher training. External HSE audits are conducted on a regular basis
COMPLIANCE The regulatory environment continues to become increasingly complex. Low - unchanged
Failure to comply with the frequently changing regulatory environment could
result in reputational damage or financial penalty.
The Group uses specialist advisers to help evolve appropriate policies and
practices. Close monitoring of regulatory and legislation changes is
maintained to ensure our policies and practices continue to comply with
relevant legislation.
Staff training is provided where required.
Risk Management, Principal Risks and Impact
Risk Comment Potential Impact
POLITICAL RISKS
Historically, Argentina has maintained a claim to the Falkland Islands and Relations between the UK and Argentina continue to be strained. Low - unchanged
this dispute has never been officially resolved.
However, the security afforded by the UK Government's commitment to the
Islands upholds the freedom and livelihood of the people of the Falkland
Islands and thereby of FIC.
Provided UK Government support is maintained the security of the people of the
Falkland Islands is judged to at low risk.
ECONOMIC CONDITIONS
Inflationary pressures across all Group businesses impact the cost of wages, Continued focus on cost efficiency. Customer and supplier contracts High - unchanged
services and products. structured to limit or pass on inflation risk. Cost inflation monitored
closely and passed on to customers via price increases wherever possible.
CREDIT RISK
Credit risk is the risk of financial loss if a customer fails to meet its Effective processes are in place to monitor and recover amounts due from Low - unchanged
contractual obligations. customers.
COMPETITION
FIC is considered by the senior management to be a market leader in a number Local competition is healthy for FIC and stimulates continuing business Low - unchanged
of business activities, but faces competition from local entrepreneurs in many improvement.
of the sectors in which it operates.
Momart sits in a highly competitive market, with both UK and International
competitors investing for growth.
Largely unchanged.
Moderate - unchanged
Large capital infrastructure investment projects may entice larger overseas FIC has been successful in winning work against overseas competitors and has Moderate - unchanged
businesses to look at the opportunities available and reduce the ability of built up strong links with FIG and MOD.
FIC to undertake the work.
Being located in the Falkland Islands gives FIC a competitive advantage
against overseas companies.
FOREIGN CURRENCY AND INTEREST RATE RISK
Momart is exposed to foreign currency risk arising from trading and other Forward exchange contracts are used to mitigate this risk, with the exchange Low - unchanged
payables denominated in foreign currencies. rate fixed for all significant contracts.
The Group is exposed to interest rate risks on large loans. Interest rate risk on large loans is mitigated by the use of interest rate
swaps.
FIC retail outlets accept foreign currency and are exposed to fluctuations in
the value of the dollar and euro.
Risk Management, Principal Risks and Impact
Risk Comment Potential Impact
INVENTORY
Inventory risk relates to losses on realising the carrying value on ultimate Reviews of old and slow-moving stock in Stanley are regularly undertaken by Moderate- unchanged
sale. Losses include obsolescence, shrinkage or changes in market demand such senior management and appropriate action taken.
that products are only saleable at prices that produce a loss.
FIC is the only Group business that holds significant inventories and faces
this risk in the Falkland Islands, where it is very expensive to return excess
or obsolete stock back to the UK.
PEOPLE
Loss of one or more key members of the senior management team or failure to None of the Group's businesses is reliant on the skills of any one person. The Low - unchanged
attract and retain experienced and skilled people at all levels across the wide spread of the Group's operations further dilutes the risk.
business could have an adverse impact on the business.
FIC has a reliance on being able to attract staff from overseas including many The development of tourism on St Helena has been slow and the Falkland Islands Low - decreased
from St Helena. Development of those locations might reduce the pool of remain an attractive location for St Helenian people to work.
available staff.
All Group companies are experiencing a shortage of skilled employees as the This has driven wages costs up. Moderate - unchanged
businesses grow and recover from the pandemic. In the UK, Momart has suffered
from shortages in drivers and art technicians.
The Covid-19 related risks have been summarised into a more general pandemic
risk in the current financial year due the
Statement by the Directors in Performance of their Statutory Duties in
Accordance with s172(1) Companies Act 2006
The statement by the directors in performance of their statutory duties in
accordance with s172(1) Companies Act 2006 is included in the Directors'
Report.
Chief Financial Officer's Review
Financial Review
Restatements
As detailed in note 1 to the financial statements, comparative numbers were
restated to correct the accounting treatment of some right of use assets, the
carrying value of certain investments in the Company and the application of
hedge accounting.
Revenue
Group revenue increased by £12.4 million (31%) to £52.7 million with double
digit growth in all three divisions.
Operating Profit
Operating profit at £3.9 million was £1.1 million ahead of prior year.
Underlying operating profit increased by £0.9 million (30%) to £4.0 million
(2022: £3.1 million).
Net Financing Income
The Group's net financing income of £0.1 million was £0.2 million ahead of
the prior year net financing expense due primarily to an increased movement in
the fair value of the derivative financial instrument.
Reported Pre-tax Profit
The reported pre-tax profit for the year ended 31 March 2023 was £4.0 million
(2022: £2.7 million - restated). Non-trading items in the current year
included a favourable fair value movement of £0.9 million on a derivative
financial instrument and £0.1 million of employee redundancy costs. The
Group's underlying profit before tax before these non-trading items was £3.2
million (2022: £2.3 million). Non-trading items in the prior year included a
favourable fair value movement of £0.7 million on a derivative financial
instrument following a restatement of results as detailed in note 1 to the
financial statements and £0.3 million of people related costs including
employee redundancies and compensation payable to the former Chief Executive.
Taxation
Tax on current year profits has decreased by £0.3 million. This is mainly due
to the prior year tax charge including a £0.5 million increase in deferred
tax relating to the change in tax rates from 19% to 25% from 1 April 2023,
which was partly offset by an increase in profits (£0.2 million).
Earnings per Share
Basic and Diluted Earnings per Share ("EPS") derived from reported profits was
24.9 pence (2022: 11.9 pence - restated). Basic and Diluted EPS derived from
underlying profits was 20.1 pence (2022: 9.5 pence).
Balance Sheet
The Group's balance sheet remained strong, with total net assets growing to
£44.0 million (2022: £40.8 million - restated) and retained earnings
increasing by £3.2 million to £24.5 million (2022: £21.4 million -
restated).
Net Debt
Year ended 31 March 2023 2022 Change
£m £m £m
Bank loans (13.3) (14.2) 0.9
Cash and cash equivalents 12.8 9.6 3.2
Net debt (0.5) (4.6) 4.1
Lease liabilities* (6.4) (6.5) 0.1
Net debt after lease liabilities (6.9) (11.1) 4.2
* As detailed in note 1 to the financial statements, lease liabilities have
been restated, resulting in a reduction of £0.6 million at 31 March 2022.
Bank loans reduced to £13.3 million (2022: £14.2 million) as a result of
scheduled loan repayments of £0.9 million. The Group's cash balances
increased by £3.2 million to £12.8 million (2022: £9.6 million) reflecting
improved trading and working capital position. Overall net debt improved by
£4.1 million to £0.5 million (2022: £4.6 million).
The Group's outstanding lease liabilities totalled £6.4 million (2022: £6.5
million - restated) with £4.6 million of the balance (2022: £4.7 million)
relating to the 50-year leases from Gosport Borough Council for the Gosport
Pontoon and associated ground rent, which run until June 2061.
The carrying value of intangible assets increased to £4.4 million (2022 £4.2
million) with additional investment in the retail system in FIC.
The net book value of property, plant and equipment remained materially the
same at £38.7 million (2022: £38.7 million - restated) with additions of
£2.4 million being offset by depreciation charges of £2.4 million.
At 31 March 2023, the Group had 85 (2022: 83) completed investment properties,
comprising commercial and residential properties in the Falkland Islands,
which are held for rental. In addition, FIC held land in and around Stanley,
including areas zoned for industrial development and prime mixed-use land. FIC
also held undeveloped land outside Stanley.
The net book value of the investment properties and undeveloped land of £7.9
million (2022: £8.2 million) had a fair value of £12.6 million (2022: £12.5
million).
Deferred tax assets relating to future pension liabilities stood at £0.5
million (2022: £0.7 million). This balance relates to the deferred tax
benefit of expected future pension payments in the FIC unfunded scheme
calculated by applying the 26% Falkland Islands' tax rate to the pension
liability.
Inventories, which largely represent stock held for resale and raw materials
increased by £0.2 million to £6.9 million at 31 March 2023 (2022: £6.7
million). A 12% increase in stock held for resale in FIC was partially offset
by a decrease in work in progress with less private house building activity.
Trade and other receivables increased by £2.3 million to £10.2 million at 31
March 2023 (2022: £7.9 million) with increased construction business in the
Falkland Islands and a high volume of exhibition sales activity in Momart.
Trade and other payables increased by £3.7 million to £13.7 million at 31
March 2022 (2022: £10.0 million) reflecting increased trading activity as
detailed above and an increase in amounts received in advance of service
delivery in FIC.
At 31 March 2023, the liability due in respect of the Group's only defined
benefit pension scheme, in FIC, was £2.0 million (2022: £2.6 million). This
pension scheme, which was closed to new entrants in 1988 and to further
accrual in 2007, is unfunded and liabilities are met from operating cash flow.
A decrease in the liability largely arose as a result of an increase in
interest rates on relevant corporate bonds and has been fed through reserves
in accordance with IAS 19. Eleven former employees receive a pension from the
scheme at 31 March 2023 and there are three deferred members.
The Group's deferred tax liabilities, excluding the pension asset at 31 March
2023, were £4.2 million (2022: £3.8 million - restated) with the increase
due largely to temporary differences on property, plant and equipment.
Cash Flows
Net cash inflow from operating activities of £7.5 million was £2.4 million
more than the prior year. The increase was due to a combination of a £0.8
million increase in underlying EBITDA* and a £1.4 million improvement in
working capital.
The Group's operating cash flow can be summarised as follows:
Year ended 31 March 2023 2022 Change
£m £m £m
Underlying profit before tax 3.2 2.3 0.9
Depreciation & amortisation 2.6 2.4 0.2
Gain on disposal of fixed asset (0.3) - (0.3)
Net interest payable 0.8 0.8 -
Underlying EBITDA* 6.3 5.5 0.8
Non-trading, cash items (0.1) - (0.1)
Decrease / (Increase) in finance lease receivables 0.2 (0.1) 0.3
Decrease / (increase) in working capital 1.4 - 1.4
Tax paid and other (0.3) (0.3) -
Net cash inflow from operating activities 7.5 5.1 2.4
Financing and investing activities
Capital expenditure (2.0) (2.7) 0.7
Disposal of fixed assets 0.4 0.1 0.3
Net bank and lease liabilities interest paid (0.8) (0.8) -
Bank and lease liability repayments (1.5) (6.6) 5.1
Dividends paid (0.4) (0.1) (0.3)
Net cash outflow from financing and investing activities (4.3) (10.1) 5.8
Net cash inflow / (outflow) 3.2 (5.0) 8.2
Cash balance b/fwd. 9.6 14.6 (5.0)
Cash balance c/fwd. 12.8 9.6 3.2
*EBITDA is defined as earnings before interest and tax after adding being
depreciation and amortisation costs
Financing and Investing Activities
During the year, the Group invested £2.0 million of capital expenditure,
comprising £1.9 million of fixed asset property, plant and equipment and
£0.1 million of computer software.
The bank and lease repayments of £6.6 million in the prior year included
£5.0 million CBILS loans repaid in June 2021.
The Strategic Report comprises the Chief Executive's Strategic Review and the
Chief Financial Officer's Review.
Approved by the Board of Directors and signed on behalf of the Board
Stuart Munro
Chief Executive
4 August 2023
Board of Directors and Secretary
Robin Williams, Non-executive Chairman
Robin joined the Board in September 2017. He has a wide breadth of corporate
experience, gained at a range of quoted and private businesses as well as from
an early career in investment banking. He is currently Chairman at Keystone
Law Group plc and at Churchill China plc, and is also a non-executive director
at Headlam plc and the Manufacturing Technology Centre Limited. Robin
qualified as an accountant in 1982 after graduating in engineering science
from the University of Oxford. He worked in corporate finance for ten years
before leaving the City in 1992 to co-found the packaging business, Britton
Group plc. In 1998, he moved to Hepworth plc, the building materials group,
and since 2004 he has focused on non-executive work in public, private and
private equity backed businesses. His financial background provides the
experience required as Chairman of the Group to review and challenge decisions
and opportunities. Robin is a member of the Audit and Remuneration Committees
and is Chairman of the Nominations Committee.
Stuart Munro, Chief Executive
Stuart joined the Board on 28 April 2021 as Chief Financial Officer before
taking over as Chief Executive on 14 April 2022. He qualified as a chartered
accountant with Ernst & Young and worked as a divisional finance director
in number of UK companies including Balfour Beatty, Alfred McAlpine
Infrastructure Services and FirstGroup as well as Transport for London. From
2015 until joining FIH group, Stuart provided strategic, financial and
operational consultancy to a number of medium sized Private Equity backed
services companies across a variety of sectors.
Reuben Shamu, Chief Finance Officer
Reuben joined the Board on 12 September 2022 as Chief Financial Officer. He
qualified as a chartered accountant with KPMG and worked in professional
practice for 12 years before moving into industry in 2008. For the last 4
years he has been Commercial Director for the UK operations of privately-owned
CP Holdings Group, which has interests in hotels and leisure, commercial
office real estate, engineering and construction. His previous roles include
Finance Director at Sturrock and Robson Group, Financial Planning and Analysis
Director at Smiths Detection Group and Group Financial Controller at Veolia
Water UK.
Robert Johnston, Non-executive Director
Robert joined the Board on 13 June 2017. He is an experienced non-executive
director and investment professional and has served on the boards of several
quoted companies in both North America and in UK, including Fyffes PLC and
Supremex Inc. Robert has been the Chief Strategy Officer and Executive Vice
President at The InterTech Group, Inc. and has over 20 years of experience in
various financial and strategic roles. He is the principal representative of
the Jerry Zucker Revocable Trust. Robert brings experience on many
transactions at both the corporate and asset level, including debt and equity,
and his experience in the banking sector will prove invaluable to developing
the Group. Robert represents the Company's largest shareholder, "The Article 6
Marital Trust, created under the First Amended and Restated Jerry Zucker
Revocable Trust dated 4-2-07", which has a beneficial holding of 3,596,553
ordinary Shares, representing 28.7% of the Company's issued share capital.
He is currently on the boards of Colabor Group Inc, Supremex Inc. (where he is
Chairman), Swiss Water Decaffeinated Coffee Inc and RGC Resources Inc. Robert
is a member of the Nominations and Audit Committees and is Chairman of the
Remuneration Committee.
Dominic Lavelle, Non-executive Director
Dominic joined the Board on 1 December 2019. He brings to FIH a wide breadth
of corporate experience. Most recently, Dominic was Chief Financial Officer of
SDL plc from 2013 to 2018. He has over 15 years' experience as a UK plc Main
Board Director and has been Finance Director/Chief Financial Officer of seven
UK publicly traded companies including Mothercare plc, Alfred McAlpine plc,
Allders plc and Oasis plc. His experience, in both permanent roles and
turnaround and restructuring projects across several business sectors is a
great benefit to the Group, particularly with the various business streams
operated by FIC.
After graduating in Civil and Structural Engineering from the University of
Sheffield in 1984, Dominic trained with Arthur Andersen and qualified as a
chartered accountant in 1989. He is currently senior independent non-executive
director and Chair of the Audit Committee of the AIM quoted Fulcrum Utility
Services Limited and a director of Steenbok Newco 10 SARL, a wholly owned
subsidiary of the Steinhoff Group. Dominic is a member of the Nominations and
Remuneration Committees and is Chair of the Audit Committee.
Holger Schröder, Non-executive Director
Holger joined the Board on 1 June 2023. He has over 28 years' experience
gained in a variety of predominantly Swiss companies, most recently as the CFO
and a board member of Janser Group, a family-owned real estate and investment
business based in Switzerland, where he has been for the last six years.
Janser Group controls 12.6% of the ordinary share capital of FIH (which
comprises 1,451,998 shares in FIH held by Janser Group and a further 125,327
held personally by Martin Janser). Holger is a member of the Audit,
Nominations and Remuneration Committees.
Company Secretary
AMBA Secretaries Limited
400 Thames Valley Park Drive
Reading
Berkshire
RG6 1PT
Corporate Governance Statement
Dear Shareholder,
As Chairman of the Company, I am responsible for leading the Board in applying
good corporate governance and the Board is committed to appropriate governance
across the business, both at an executive level and throughout its operations.
The Board strives to ensure that the objectives of the business, the
principles and risks are underpinned by values of good governance throughout
the organisation.
The FIH group plc Board values include embedding a culture of ethics and
integrity, and the adoption of higher governance standards, to maintain its
reputation by fostering good relationships with employees, shareholders and
other stakeholders to deliver long term business success.
In 2018 the AIM Rules for Companies were updated to acknowledge a change in
investor expectations toward corporate governance for companies admitted to
trading on AIM, and the Board, took the decision to adopt the revised Quoted
Companies Alliance Corporate Governance Code 2018 (the "QCA Code") which they
believe is the most appropriate recognised governance code for the Company.
The QCA Code has ten principles of corporate governance that the Company has
complied with as set out on the Company's website in the Corporate Governance
section.
The Board is aware of the need to protect the interests of minority
shareholders, and balancing those interests with those of any more substantial
shareholders, including those interests of the Jerry Zucker Revocable Trust, a
major shareholder holding circa 29% of the issued share capital and voting
rights, which are represented on the Board by the non-executive director,
Robert Johnston.
Beyond the Annual General Meeting, the Chief Executive and the Chief Financial
Officer offer to meet with all significant shareholders after the release of
the half year and full year results and the Chairman is available throughout
the year. The Chief Executive, Chief Financial Officer and the Chairman are
the primary points of contact for the shareholders and are available to answer
queries over the phone or via email from shareholders throughout the year.
Business Model and Strategy
The Group's strategy is to continue to develop the potential of its existing
companies: to fill storage capacity and make further progress at Momart, to
maintain the strong cash flow from PHFC and to invest in FIC to take full
advantage of the longer-term growth opportunities in the Falkland Islands.
While doing this, management are also alert to the benefits of a well-judged
complementary acquisition that would give increased scale and growth potential
for the Group and enhance the liquidity of FIH shares.
Risk Management
The Board has overall responsibility for the systems of risk management and
internal control and for reviewing their effectiveness. The internal controls
are designed to manage rather than eliminate risk and provide reasonable but
not absolute assurance against material misstatement or loss. The key risks of
the Group are presented in the Chief Executive's Strategic Report.
The Board has determined that an internal audit function is not justified due
to the small size of the Group and its administrative function and the high
level of director review and authorisation of transactions.
A Directors' and Officers' Liability Insurance policy is maintained for all
directors and each director has the benefit of a Deed of Indemnity.
Director Independence
The Board considers itself sufficiently independent. The QCA Code suggests
that a board should have at least two independent non-executive directors. The
Board has considered each non-executive director's length of service and
interests in the share capital of the Group and considers that Mr Williams, Mr
Schröder, Mr Johnston and Mr Lavelle are independent of the executive
management and free from any undue extraneous influences which might otherwise
affect their judgement. All Board members are fully aware of their fiduciary
duty under company law and consequently seek at all times to act in the best
interests of the Company as a whole. Whilst the Company is guided by the
provisions of the QCA Code in respect of the independence of directors, it
gives regard to the overall effectiveness and independence of the contribution
made by directors to the Board in considering their independence, and does not
consider a director's period of service in isolation to determine this
independence.
The Board acknowledges that Robert Johnston, who joined the Board on 13 June
2017, represents the Company's largest shareholder, "The Article 6 Marital
Trust, created under the First Amended and Restated Jerry Zucker Revocable
Trust dated 4-2-07", (the "Zucker Trust"), which has a beneficial holding of
3,596,553 ordinary Shares, representing circa 29% of the Company's issued
share capital. The Board has considered Mr Johnston's independence, given his
representation of this shareholding and all Board members have satisfied
themselves that they consider Mr Johnston to be independent. This is as a
consequence of (i) the fact that Mr Johnston has considerable international
investment expertise, and (ii) that the shareholding of his employer in FIH
represents only a small part of its wider portfolio, but nonetheless aligns
him with the interests of FIH shareholders generally.
The Board also acknowledges that Holger Schröder, who joined the Board on 1
June 2023, represents one of the Company's major shareholders, the Janser
Group which controls 12.6% of the Company's equity. The Board has considered
Mr Schröder's independence, given his representation of this shareholding and
all Board members have satisfied themselves that they consider Mr Schröder to
be independent. This is as a consequence of (i) Mr Schröder being employed by
the operational side of the Janser Group and (ii) Janser Group having a
division involved in the investor-side decision making process which is
separate from its operational activities, where Mr Schröder is employed.
All directors retire by rotation and are subject to election by shareholders
at least once every three years. Any non-executive directors who have served
on the Board for at least nine years are subject to annual re-election.
Time Commitment of Directors
Stuart Munro, Chief Executive of the company and Reuben Shamu, Chief Financial
Officer are the only executive directors. Robin Williams, Robert Johnston,
Dominic Lavelle and Holger Schröder have all been appointed on service
contracts for an initial term of three years. Overall, it is anticipated that
non-executive directors spend 10-15 days a year on the Group's business after
the initial induction, which includes a trip to the Group's subsidiary in the
Falkland Islands. However, the non-executive directors and the Chairman in
particular, spend significantly more time than this on the business of the
Group.
All directors are expected to attend all Board meetings, the Annual General
Meeting and any extraordinary general meetings. Non-executive directors are
expected to devote additional time in respect of any ad hoc matters, such as
significant investment opportunities, responding to market changes,
consideration of any business acquisitions, and any significant recruitment or
corporate governance changes.
Skills and Qualities of Each Director
The Board recognised the importance of having directors with a diverse range
of skills, experience and attributes, which we have across our current Board.
Each Board member contributes a different skill set based on their own
experience, which is discussed in detail in the "Board of Directors and
Secretary".
Board Meetings
The Board meets frequently throughout the year to consider strategy, corporate
governance matters, and performance. Prior to each meeting, all directors
receive appropriate and timely information. Since the last annual report was
published on 5 July 2022 there have been six Board meetings. Robin Williams,
Stuart Munro, Reuben Shamu, Robert Johnston and Dominic Lavelle have attended
all meetings. Jeremy Brade ceased to be a director prior to the six meetings
and Holger Schröder attended every meeting after his appointment.
The Remuneration committee has met once since 5 July 2022 to review executive
base pay and bonus structure and all members of the committee were in
attendance. There have also been two Audit Committee meetings since 5 July
2022, which were attended by all members of the committee. The Nominations
Committee meets on an ad hoc basis to consider Board composition and
succession and met a number of times during the year to consider the
replacement of the Chairman, who is stepping down, and appointment of a
non-executive director.
Board Directors
The Board comprises Robin Williams, the non-executive Chairman, Stuart Munro,
the full time Chief Executive, Reuben Shamu, the full time Chief Financial
Officer and three other non-executive directors, Robert Johnston, Dominic
Lavelle and Holger Schröder.
Details of How Each Director Keeps Their Skill Set Up to Date
The Board as a whole is kept abreast by the Company's lawyers with
developments of governance, and by WH Ireland, the Company's Nominated
Adviser, of updates to AIM regulations. The Group's auditors, Grant Thornton,
meet with the Board as a whole twice a year and keep the Board updated with
any regulatory changes in finance and accounting.
Any External Advice Sought by the Board
RSM Tenon, the Group's tax advisors ensure compliance with taxation law and
transfer pricing and the Company's lawyers advised on a number of areas.
Internal Advisory Responsibilities
The Chief Executive and the Chief Financial Officer help keep the Board up to
date on areas of new governance and liaise with the Nominated Adviser on areas
of AIM requirements, and with the Company's lawyers on areas such as Modern
Slavery, Data Protection and other legal matters. They also liaise with the
Company's tax advisers with regards to tax matters and with the Group's
auditors with respect to the application of current and new accounting
standards, and on the status on compliance generally around the Group. The
Chief Executive has frequent communication with the Chairman and is available
to other members of the Board as and when required.
Board Performance Evaluation
In view of the change in Chairman at the forthcoming AGM, no review of the
effectiveness of the Board was carried out in the period. It is intended that
one will be carried out in the first twelve months of the tenure of the new
Chairman, once appointed.
Robin Williams
Chairman
4 August 2023
Audit Committee Report
The Audit Committee comprises the four non-executive directors: Robert
Johnston, Dominic Lavelle, Holger Schröder and Robin Williams, and is chaired
by Dominic Lavelle. The Audit Committee reviews the external audit activities,
monitors compliance with statutory requirements for financial reporting and
reviews the half year and annual financial statements before they are
presented to the Board for approval. The Audit Committee also keeps under
review the scope and results of the audit and its cost effectiveness and the
independence and objectivity of the Auditor and the effectiveness of the
Group's internal control systems.
The Committee meets twice a year to review both the year end and half year
results and the Company's auditors attend both of these meetings in person. It
is the Audit Committee's role to provide formal and transparent arrangements,
to consider how to apply financial reporting under IFRS, the Companies Act
2006, and the requirements of the QCA Code and also to maintain an appropriate
relationship with the independent auditor of the Group.
The current terms of reference of the Audit Committee were reviewed and
updated in June 2023.
Effectiveness of the External Audit Process
The Audit Committee is committed to ensuring that the external audit process
remains effective on a continuing basis as set out below:
· Reviewing the independence of the incumbent auditor;
· Considering if the audit engagement planning, including the team
quality and numbers is sufficient and appropriate;
· Ensuring that the quality and transparency of communications with
the external auditors are timely, clear, concise and relevant and that any
suggestions for improvements or changes are constructive;
· Exercising professional scepticism, including but not limited to,
looking at contrary evidence, the reliability of evidence, the appropriateness
and accuracy of management responses to queries, considering potential fraud
and the need for additional procedures and the willingness of the auditor to
challenge management assumptions; and
· Feedback is provided by the external auditor twice a year to the
Audit Committee, after the full year audit and half year review, with
one-to-one discussions held beforehand between the Chair of the Audit
Committee and the audit firm partner.
External Auditor
The external audit service was put out to tender during the year and Grant
Thornton UK LLP was appointed as the Company's external auditor during the
year. It is therefore the audit engagement partner's first year on the
assignment. The analysis of the auditor's remuneration is shown in note 6. Tax
advisory services are provided by RSM UK Tax and Accounting Limited.
Non-audit Services Provided by the External Auditor
The Audit Committee keeps the appointment of external auditors to perform
non-audit services for the Group under continual review, receiving a report at
each Audit Committee meeting. In the year ended 31 March 2023, there were no
non-audit fees paid to either the outgoing auditors KPMG LLP or incoming
auditors Grant Thornton UK LLP (2022: £nil).
Emerging Risks
The risk management approach is subject to continuous review and updates in
order to reflect new and developing issues which might impact business
strategy. Emerging or topical risks are examined to understand their
significance to the business. Risks are identified and monitored through
risk registers at the Group level and discussed at each Board meeting to
consider new threats.
Areas of Judgement and Estimation
In making its recommendation that the financial statements be approved by the
Board, the Audit Committee has taken account of the following significant
issues and judgements involving estimation:
Long term construction contracts
Significant estimation is involved in determining the revenue and profit to be
recognised on long term contracts. This includes determining percentage
completion at the balance sheet date by estimating the total expected costs to
complete each contract along with their future profitability. These estimates
directly influence the revenue and profit that can be recognised on such
contracts.
Inventory Provisions
An inventory provision is booked when the realisable value from sale of the
inventory is estimated to be lower than the inventory carrying value, or where
the stock is slow-moving, obsolete or damaged, and is therefore unlikely to be
sold. The quantification of the inventory provision requires the use of
estimates and judgements and if actual future demand were to be lower or
higher than estimated, the potential amendments to the provisions could have a
material effect on the results of the Group.
Defined Benefit Pension Liabilities
A significant degree of estimation is involved in predicting the ultimate
benefit payments to pensioners in the FIC defined benefit pension scheme.
Actuarial assumptions have been used to value the defined benefit pension
liability (see note 23). Management have selected these assumptions from a
range of possible options following consultations with independent actuarial
advisers. The actuarial valuation includes estimates about discount rates and
mortality rates, and the long-term nature of these plans, make the estimates
subject to significant uncertainties.
There are eleven pensioners currently receiving a monthly pension under the
scheme and three deferred members.
Dominic Lavelle
Independent Non-executive Director
4 August 2023
Directors' Report
The directors present their annual report and the financial statements for the
Company and for the Group for the year ended 31 March 2023.
Results and Dividend
As set out in the Consolidated Income Statement, the Group profit for the year
after taxation amounted to £3,122,000 (2022: £1,485,000). Basic earnings
per share were 24.9 pence (2022: 11.9 pence).
With the Group's increase in profitability, the Board is pleased to announce
that a final dividend of 5.3 pence per share will be recommended for approval
at the Annual General Meeting. Together with the interim dividend of 1.2
pence paid on 31 January 2023, the proposed dividend will take the total
dividend for the year ended 31 March 2023 to 6.5 pence per share (2022: 3.0
pence).
Principal Activities
The business of the Group during the year ended 31 March 2023 was general
trading in the Falkland Islands, the operation of a passenger ferry across
Portsmouth Harbour and the provision of international arts logistics and
storage services. The principal activities of the Group are discussed in more
detail in the Chief Executive's Strategic Report and should be considered as
part of the Directors' Report for the purposes of the requirements of the
enhanced Directors' Report guidance.
The principal activity of the Company is that of a holding company.
Qualifying Indemnity Provisions
Qualifying indemnity provisions are detailed in the Corporate Governance
Statement on page 17.
Future Developments
Details of future developments are presented within the Strategic Report on
page 3 to 14.
Directors
Reuben Shamu was appointed as a director on 12 September 2022 and Holger
Schröder was appointed as a director on 1 June 2023.
Directors' Interests
The interests of the directors in the issued shares and share options over the
shares of the Company are set out below under the heading "Directors'
interests in shares". During the year, no director had an interest in any
significant contract relating to the business of the Company or its
subsidiaries, other than their own service contract.
Health and Safety
The Group is committed to the health, safety and welfare of its employees and
third parties who may be affected by the Group's operations. The focus of the
Group's effort is to prevent accidents and incidents occurring by identifying
risks and employing appropriate control strategies. This is supplemented by a
policy of investigating and recording all incidents.
Employees
The Board is aware of the importance of good relationships and communication
with employees. Where appropriate, employees are consulted about matters which
affect the progress of the Group and which are of interest and concern to them
as employees. Within this framework, emphasis is placed on developing greater
awareness of the financial and economic factors which affect the performance
of the Group. Employment policy and practices in the Group are based on
non-discrimination and equal opportunity irrespective of age, race, religion,
sex, gender identity, sexual orientation, colour and marital status. In
particular, the Group recognises its responsibilities towards disabled persons
and does not discriminate against them in terms of job offers, training or
career development and prospects. If an existing employee were to become
disabled during the course of employment, every practical effort would be made
to retain the employee's services with whatever retraining is appropriate. The
Group's pension arrangements for employees are summarised in note 23.
Payments to Suppliers
The policy of the Company and each of its trading subsidiaries, in relation to
all its suppliers, is to settle the terms of payment when agreeing the terms
of the transaction and to abide by those terms, provided that it is satisfied
that the supplier has provided the goods or services in accordance with agreed
terms and conditions. The Group does not follow any code or standard payment
practice. As a holding company, the Company had £6,000 of trade creditors at
31 March 2023 (2022: £29,000).
Share Capital and Substantial Interests in Shares
During the year no shares were issued. Further information about the Company's
share capital is given in note 25. Details of the Company's executive share
option scheme can be found in note 24.
The Company has been notified of the following interests in 3% or more of the
issued ordinary shares of the Company as at 4 August 2023:
Number of shares Percentage of shares in issue
The Article 6 Marital Trust created under the First Amended and Restated Jerry 3,596,553 28.73
Zucker Revocable Trust dated 2 April 2007
Janser Group 1,577,325 12.61
Quaero Capital Funds (Lux) - Argonaut 1,057,158 8.44
J.F.C. Watts 797,214 6.37
Christian Struck 380,000 3.04
Charitable and Political Donations
Charitable donations made by the Group during the year amounted to £15,802
(2022: £16,214), these were largely paid to local community charities in the
Falkland Islands. There were no political donations in the year (2022: nil).
Disclosure of Information to the External Auditor
The directors who held office at the date of this Directors' Report confirm
that, so far as they are each aware, there is no relevant audit information of
which the Company's external auditor is unaware; and each director has taken
all the steps that they ought to have taken as a director to make themselves
aware of any relevant audit information and to establish that the Company's
external auditor is aware of that information.
External Auditor
A resolution to approve the appointment of Grant Thornton UK LLP will be put
to shareholders at the Annual General Meeting.
Greenhouse Gas Emissions
The 2018 Regulations introduced requirements under Part 15 of the Companies
Act 2006 for large unquoted companies to disclose their annual energy use and
greenhouse gas emissions, and related information. However, the Group has
applied the option permitted to exclude any energy and carbon information
relating to its subsidiary which the subsidiary would not itself be obliged to
include if reporting on its own account. This applies to all subsidiaries
within the Group. FIH group plc itself consumes less than 40MWh and, as a low
energy user, is not required to make the detailed disclosures of energy and
carbon information but is required to state, in its relevant report, that its
energy and carbon information is not disclosed for that reason. FIH group
plc's annual energy use and greenhouse gas emissions, and related information
has not been disclosed in this annual report as it is a low energy user.
Statement by the Directors in Performance of their Statutory Duties in
Accordance with s172(1) Companies Act 2006
As an experienced Board, our intention is to behave responsibly and we
consider that we, both as individuals and as a collective Board, as
representatives of FIH group plc and the Group as a whole, during the year
ended 31 March 2023, have acted in good faith, to promote the success of the
Company for the benefit of its members as a whole, having regard to the wider
stakeholders as set out in s172 of the Companies Act. In the Falkland Islands
and in Gosport/Portsmouth (where PHFC provide the ferry service), the
subsidiaries of the Group work closely with local government and local
communities and Momart, is an active and founding member of several art
communities and its employees give talks at conferences, sharing their
experiences on the import and export of art work.
Stakeholder Engagement
The directors engage with the Group's stakeholders on material issues relating
to their business, taking into consideration current and future events and
principal decisions. The engagement supports the directors to understand the
impact of their decisions and identify any material issues. This aligns with
the Group's purpose and strategy. The details of the Group's interaction with
its wider stakeholders is as follows:
Customers:
FIC demonstrates its customer focus through surveys and regular meetings with
key customers to understand their requirements and to build long-term
relationships. During the financial year ended 31 March 2023, Board members
met with the Governor of the Falkland Islands and Chief Executive of FIG. They
also met with the MoD.
PHFC maintains close contact with its customer base via social media and
regularly tweets and posts information on Facebook about local pantomimes,
football matches, and local events of interest to the local community and
visiting tourists. PHFC also maintains close links to the Navy based in
Portsmouth.
Momart engage with industry working groups to propose and implement
sustainability improvements in delivering fine art logistics services.
Colleagues:
We have an experienced, diverse and dedicated workforce which we recognise as
a key asset of our businesses. Therefore, it is important that we continue to
create the right environment to encourage and create opportunities
for individuals and teams to realise their full potential.
We have an open, collaborative and inclusive management structure and engage
regularly with our employees. We do this through an appraisal process,
structured career conversations, employee surveys, company presentations and
away days.
Suppliers:
Across the Group, we aim to build long-term relationships with our suppliers
that help ensure the continued delivery of the high-quality services the Group
provides. We are clear about our payment practices. We expect our suppliers to
adopt similar practices throughout their supply chains to ensure fair and
prompt treatment of all creditors. All suppliers are vetted to ensure
compliance with the Group's zero tolerance approach to modern slavery.
Communities:
We are committed to supporting the communities in which we operate, including
local businesses, residents and the wider public.
We engage with the local communities in Gosport/Portsmouth and in the Falkland
Islands through our community donations, and providing employment and work
experience opportunities. Apprentices have been taken on at both Momart and
PHFC, in areas including Customs and Excise and Engineering.
PHFC also work closely with local government to ensure representation in local
transport developments.
Environment:
The Group is committed to doing its part to protect the local and global
environment, minimising the environmental impacts of its activities, products
and services, and to the continual improvement of its environmental
performance.
Steps already taken include:
FIC
· Use of ground heat source systems on new housing developments and
fitting solar panels.
· Elimination of plastic bags from all retail outlets and use of
paper cups, straws, and other recyclable packaging in the FIC cafes wherever
possible.
· LED lighting in offices, warehouses and retail outlets.
· Utilisation of best practice insulation methods for building
construction and renovation.
Momart
· Member of the Gallery Climate Coalition, an industry wide body
working on all impacts across the industry.
· Conversion of vehicles to meet the Euro 6 emissions standard.
· LED lighting and movement sensors across all warehouse units.
· Renewable energy from solar panels installed at the Leyton
warehouse unit 14.
· Sourcing of materials for packing cases from sustainable sources
wherever possible.
· Wood waste repurposed or burnt for energy rather than going to
landfill.
PHFC
· Installation of new exhaust cleaners on the vessels reducing NOx
and Co2 emissions.
· Smart LED lighting across the estate.
· Provision of coffee cup recycling.
· Investigation of smart apps to promote environmentally friendly
journey planning.
Governments and Regulatory Authorities
Our work brings us into regular contact with the MOD, FIG and local
authorities, as we deliver construction projects, repairs and other work. We
strive to be proactive and transparent, consulting with them to ensure that
our planning reflects local sensitivities.
PHFC staff attend meetings with local government members and Gosport Borough
Council.
The Momart Business Process and Compliance Manager attends industry forums,
such as Logistics UK, discussing developments in the industry with the forum
and any attending HMRC officers. The Momart Security Manager liaises with the
Civil Aviation Authority to ensure that Momart's security procedures and staff
training remain compliant.
Media
All businesses are active on social media, using Twitter, Instagram, LinkedIn
and Facebook.
Non-governmental Organisations:
PHFC is a Heritage Committee member.
Momart representatives attend the UK Registrars' Group conference and the
European Registrars' Group conference and speak on issues such as customs
procedures, Brexit, or specialised Export licences, such as the "Convention on
International Trade in Endangered Species of Wild Fauna and Flora", which
requires permits for the export of ivory, rosewood and mahogany.
With over 40 years of experience and expertise in handling, transportation and
storage of art, Momart has held a Royal Warrant for work with the Royal
Collection since 1993.
Momart is a founding member of ARTIM, "the Art Transporter International
Meeting" and attends the annual conference to discuss the best practices and
the key business issues concerning the packing, transportation and movement of
works of art.
Momart is also a member of the UK Registrars' Group, which is a non-profit
association providing a forum for the exchange of ideas and expertise between
registrars, collection managers and other museum professionals in the United
Kingdom, Europe and worldwide.
Shareowners and Analysts:
Beyond the Annual General Meeting, the Chief Executive, Chief Financial
Officer and the Chairman offer to meet with all significant shareholders after
the release of the half year and full year results. The Chief Executive, Chief
Financial Officer and the Chairman are the primary points of contact for the
shareholders and are available to answer queries over the phone or via email
from shareholders throughout the year.
The Annual General Meeting provides a chance for investors and analysts to
meet the Board face-to-face.
Debt Providers:
The Group has several debt facilities provided by HSBC, who are kept fully
informed on all relevant areas of the business, through regular meetings and
presentations. The relationship with HSBC dates back to the Company's
incorporation in 1997.
Annual General Meeting
The Company's Annual General Meeting will be held on 28 September 2023. The
notice of the Annual General Meeting and a description of the special business
to be put to the meeting are considered in a separate circular to
Shareholders.
Details of Directors' Remuneration and Emoluments
The remuneration of non-executive directors consists only of annual fees for
their services, both as members of the Board, and of Committees on which they
serve.
An analysis of the remuneration and taxable benefits in kind (excluding share
options) provided for and received by each director during the year to 31
March 2023 and in the preceding year is as follows:
Health insurance Pension 2023 2022
Salary / Fees £'000 Contributions Bonus Total Total
£'000 £'000 £'000 £'000 £'000
John Foster* 8 - - - 8 522
Stuart Munro 258 1 - 100 359 271
Reuben Shamu** 89 1 9 17 116 -
Robin Williams 60 - - - 60 60
Jeremy Brade*** 14 - - - 14 30
Robert Johnston 30 - - - 30 30
Dominic Lavelle 30 - - - 30 30
Holger Schröder**** - - - - - -
Total 489 2 9 117 617 943
* Resigned 14 April 2022
** Appointed 12 September 2022
*** Resigned 20 September 2022
**** Appointed 1 June 2023
The Chief Executive, Stuart Munro, participates in an annual performance
related bonus arrangement, with the potential during the year to earn up to
60% of his salary. The Chief Finance Officer, Reuben Shamu, participates in an
annual performance related bonus arrangement, with the potential during the
year to earn up to 30% of his salary. The bonuses are subject to the
achievement of specified corporate and personal objectives and are payable in
cash.
Directors' Interests in Shares
Full details of historic awards of deferred shares to John Foster are provided
in note 24 Employee benefits: share based payments. During the year ended 31
March 2023, no options were exercised by him and the remaining 3,591 nil cost
share options have an expiry date of 17 June 2023.
At 31 March 2023, Stuart Munro had 55,814 LTIP share options with an exercise
price of 10 pence, a 3-year vesting period and an expiry date of 3 December
2026. No other directors have any share options.
The exercise of LTIP awards is subject to achieving share price performance
and earnings targets which have been determined by the remuneration committee,
after discussion with the Company's advisers. No LTIP share options were
granted during the year.
In addition to the share options set out above, the interests of the
directors, their immediate families and related trusts in the shares of the
Company according to the register kept pursuant to the Companies Act 2006 were
as shown below:
Ordinary shares as at Ordinary shares as at
31 March 2023 31 March 2022
Robin Williams 5,625 5,625
Stuart Munro 4,400 4,400
John Foster 118,542 118,542
Jeremy Brade 15,022 15,022
Robert Johnston* *3,656,553 *3,654,053
Dominic Lavelle 2,000 2,000
* Robert Johnston holds 60,000 shares in his own name, and as he is also the
representative of the Company's largest shareholder, "The Article 6 Marital
Trust, created under the First Amended and Restated Jerry Zucker Revocable
Trust dated 4-2-07", which holds 3,596,553 Shares, Robert Johnston is
interested in 3,656,553 Shares in total, representing 29.2 percent of the
Company's 12,519,900 total voting rights.
Additional information and disclosures required in this Directors' Report by
the Companies Act 2006 and AIM rules and regulations can be located as
follows:
Disclosure Location
Financial risk management Note 26 of the financial statements
Matters of Strategic importance Chief Executive's Strategic Review
Approved by the Board and signed on its behalf by:
AMBA Secretaries Limited
4 August 2023
Kenburgh Court
133-137 South Street
Bishop's Stortford
Hertfordshire
CM23 3HX
Statement of Directors' Responsibilities in Respect of the Annual Report and
the Financial Statements
The directors are responsible for preparing the Annual Report, Strategic
Report, Directors' Report, and the Group and Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent Company
financial statements for each financial year. Under the AIM Rules of the
London Stock Exchange, they are required to prepare the Group financial
statements in accordance with UK-adopted international accounting standards
and applicable law and they have elected to prepare the parent Company
financial statements on the same basis.
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and parent Company and of the Group's profit or loss for
that period. In preparing each of the Group and parent Company financial
statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable, relevant and
reliable;
· state whether they have been prepared in accordance with
UK-adopted international accounting standards;
· assess the Group and parent Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern;
and
· use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease operations, or
have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the parent
Company and enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal control as
they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a Strategic Report and a Directors' Report that complies with that
law and those regulations.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Consolidated Income Statement
FOR THE YEAR ENDED 31 MARCH 2023
Notes Underlying Non-trading Total Underlying Non-trading Restated Total
2023 Items 2023 2022 Items 2022
£'000 (Note 5) £'000 £'000 (Note 5) £'000
2023 2022
£'000 £'000
4 Revenue 52,712 - 52,712 40,319 - 40,319
Cost of sales (31,588) - (31,588) (23,405) - (23,405)
Gross profit 21,124 - 21,124 16,914 - 16,914
Operating expenses (17,111) (79) (17,190) (13,834) (300) (14,134)
6 Operating profit / (loss) 4,013 (79) 3,934 3,080 (300) 2,780
8 Net Finance income / (expense) (795) 907 112 (796) 704 (92)
Profit before tax 3,218 828 4,046 2,284 404 2,688
9 Taxation (705) (219) (924) (1,094) (109) (1,203)
Profit for the year attributable to equity holders of the company 2,513 609 3,122 1,190 295 1,485
10 Earnings per share
Basic 24.9p 11.9p
Diluted 24.9p 11.9p
The accompanying notes form part of these Financial Statements.
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 MARCH 2023
2023 Restated 2022
£'000 £'000
Profit for the year 3,122 1,485
Cash flow hedges: effective portion of changes in fair value - 172
Amortisation of hedge reserve 13 3
17 Deferred tax on share options and other financial liabilities (3) 58
17 Deferred tax on effective portion of changes in fair value - (40)
Items that are or may be reclassified subsequently to profit or loss 10 193
23 Re-measurement of the FIC defined benefit pension scheme 553 237
17 Movement on deferred tax asset relating to the pension scheme (176) (62)
Items which will not ultimately be recycled to the income statement 377 175
Total other comprehensive income 387 368
Total comprehensive income 3,509 1,853
The accompanying notes form part of these Financial Statements.
Consolidated Balance Sheet
AT 31 MARCH 2023
Restated Restated 1 April
2023 2022 2021
Notes £'000 £'000 £'000
Non-current assets
11 Intangible assets 4,376 4,229 4,183
12 Property, plant and equipment 38,677 38,718 39,562
13 Investment properties 7,922 8,164 7,123
15 Investment in Joint venture 259 259 259
19 Trade and other receivables due in more than one year - 44 88
16 Finance lease receivable 681 725 590
17 Deferred tax assets 482 666 739
26 Derivative financial instruments 1,559 644 -
Total non-current assets 53,956 53,449 52,544
Current assets
18 Inventories 6,876 6,740 5,871
19 Trade and other receivables 10,189 7,947 5,868
16 Finance lease receivable 397 511 558
20 Cash and cash equivalents 12,800 9,572 14.556
Total current assets 30,262 24,770 26,853
TOTAL ASSETS 84,243 78,219 79,397
Current liabilities
22 Trade and other payables (13,718) (9,970) (6,775)
21 Interest-bearing loans and borrowings (1,520) (1,536) (3,424)
Corporation tax payable (599) (363) (113)
Total current liabilities (15,837) (11,869) (10,312)
Non-current liabilities
21 Interest-bearing loans and borrowings (18,214) (19,183) (23,832)
26 Derivative financial instruments - - (234)
23 Employee benefits (1,978) (2,562) (2,842)
17 Deferred tax liabilities (4,215) (3,780) (3,113)
Total non-current liabilities (24,407) (25,525) (30,021)
TOTAL LIABILITIES (40,269) (37,394) (40,333)
Net assets 43,974 40,825 39,064
25 Capital and reserves
Equity share capital 1,251 1,251 1,251
Share premium account 17,590 17,590 17,590
Other reserves 703 703 703
Retained earnings 24,514 21,378 19,752
Hedging reserve (84) (97) (232)
Total equity 43,974 40,825 39,064
These financial statements, of which the accompanying notes form part, were
approved by the Board of directors on 4 August 2023 and were signed on its
behalf by:
S I Munro
R Shamu
Director
Director
Company Balance Sheet
AT 31 MARCH 2023
Restated Restated 1 April
2023 2022 2022
Notes £'000 £'000 £'000
Non-current assets
13 Investment properties 18,751 18,956 19,164
14 Investment in subsidiaries 26,757 26,762 26,737
19 Loans to subsidiaries 10,257 10,057 10,207
26 Derivative financial instruments 1,559 644 -
17 Deferred tax - - 44
Total non-current assets 57,324 56,419 56,152
Current assets
19 Trade and other receivables 11 45 118
Corporation tax receivable 189 84 54
20 Cash and cash equivalents 3,307 4,376 5,462
Total current assets 3,507 4,505 5,634
TOTAL ASSETS 60,831 60,924 61,786
Current liabilities
22 Trade and other payables (5,939) (5,849) (6,391)
21 Interest-bearing loans and borrowings (529) (529) (520)
Total current liabilities (6,468) (6,378) (6,911)
Non-current liabilities
21 Interest-bearing loans and borrowings (11,617) (12,139) (12,668)
17 Deferred tax (391) (146) -
Derivative financial instruments - - (234)
Total non-current liabilities (12,008) (12,285) (12,902)
TOTAL LIABILITIES (18,476) (18,663) (19,813)
Net assets 42,355 42,261 41,973
25 Capital and reserves
Equity share capital 1,251 1,251 1,251
Share premium account 17,590 17,590 17,590
Other reserves 5,389 5,389 5,389
Retained earnings 18,209 18,128 17,975
Hedging reserve (84) (97) (232)
Total equity 42,355 42,261 41,973
As permitted by Section 408 of the Companies Act 2006, a separate profit and
loss account of the Parent Company has not been presented. The Parent
Company's profit for the financial year is £440,000 (2022: £245,000).
These financial statements, of which the accompanying notes form part, were
approved by the Board of directors on 4 August 2023 and were signed on its
behalf by:
S I Munro
R Shamu
Director
Director
Registered company number: 03416346
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2023
2023 Restated 2022
£'000 £'000
Note Cash flows from operating activities
Profit for the year after taxation 3,122 1,485
Adjusted for:
Non-cash items:
11 Amortisation 10 21
12 Depreciation: Property, plant and equipment 2,420 2,216
13 Depreciation: Investment properties 210 197
23 Interest cost on pension scheme liabilities 70 56
24 Equity-settled share-based payment expenses 41 45
Fair value movement in derivative financial instrument (907) (704)
Gain on disposal of fixed assets (337) (9)
Exchange losses 26 13
Bank interest payable 424 436
Lease liability finance expense 304 304
Decrease / (increase) in finance lease receivable 158 (88)
Corporation and deferred tax expense 924 1,203
Non-cash items 3,343 3,690
Operating cash flow before changes in working capital 6,465 5,175
Increase in trade and other receivables (2,198) (2,035)
Increase in inventories (136) (869)
Increase in trade and other payables 3,748 3,195
Changes in working capital 1,414 291
Cash generated from operations 7,879 5,466
Payments to pensioners (101) (99)
Corporation taxes paid (243) (256)
Net cash flow from operating activities 7,535 5,111
Cash flows from investing activities
12 Purchase of property, plant and equipment (1,859) (1,333)
11 Purchase of Intangibles (115) (67)
11 Purchase of investment properties (10) (1,238)
Proceeds from sale of property, plant and equipment 378 76
Net cash flow from investing activities (1,606) (2,562)
Cash flow from financing activities
Repayment of bank loans (928) (5,927)
Bank interest paid (424) (436)
Repayment of lease liabilities principal (618) (716)
Lease liabilities interest paid (304) (304)
Cash outflow on nil cost option exercise - (12)
Dividends paid (401) (125)
Net cash flow from financing activities (2,675) (7,520)
Net increase / (decrease) in cash and cash equivalents 3,254 (4,971)
Cash and cash equivalents at start of year 9,572 14,556
Exchange losses on cash balances (26) (13)
Cash and cash equivalents at end of year 12,800 9,572
The accompanying notes form part of these Financial Statements.
Company Cash Flow Statement
FOR THE YEAR ENDED 31 MARCH 2023
2023 Restated 2022
£'000 £'000
Note Cash flows from operating activities
Holding Company profit for the year 440 245
Adjusted for:
Bank interest payable 368 387
Fair value movement in financial instrument (907) (704)
Equity-settled share-based payment expenses 47 20
13 Depreciation: Investment properties 210 208
Corporation and deferred tax expense / (income) 250 135
Non-cash adjustment (32) 46
Operating cash flow before changes in working capital 408 291
Decrease in trade and other receivables 34 73
(Decrease) / increase in trade and other payables (95) 333
Changes in working capital and provisions (61) 406
Cash generated from operations 347 697
Corporation taxes paid (105) (14)
Net cash flow from operating activities 242 683
Cash flow from investing activities
Purchase of property, plant and equipment (5) -
Cash outflows in inter-company borrowing - (150)
Cash inflows in inter-company borrowing - 850
Net cash flow from investing activities (5) 700
Cash flow from financing activities
Bank loan repaid (522) (520)
Interest paid (368) (387)
Cash inflows / (outflows) in inter-company borrowing 185 (1,875)
Cash (outflows) / inflows in inter-company borrowing (200) 450
Cash outflow on nil cost option exercise - (12)
Dividends paid (401) (125)
Net cash flow from financing activities (1,306) (2,469)
Net decrease in cash and cash equivalents (1,069) (1,086)
Cash and cash equivalents at start of year 4,376 5,462
Cash and cash equivalents at end of year 3,307 4,376
The accompanying notes form part of these Financial Statements.
Consolidated Statement of Changes in Shareholders' Equity
FOR THE YEAR ENDED 31 MARCH 2023
Equity share Share premium account £'000 Other reserves Retained earnings Hedge reserve Total equity
capital £'000 £'000 £'000 £'000
£'000
Balance 1 April 2021 - restated 1,251 17,590 703 19,752 (232) 39,064
Profit for the year - - - 1,485 - 1,485
Cash flow hedges: effective portion - - - - 172 172
of changes in fair value
Amortisation of hedge reserve - - - - 3 3
Deferred tax on cash flow hedges - - - - (40) (40)
Deferred tax on other financial - - - 58 - 58
liabilities
Re-measurement of the defined - - - 175 - 175
benefit pension liability, net of tax
Total comprehensive income - - - 1,718 135 1,853
Transactions with owners in their capacity as owners:
Share option exercise - - - (12) - (12)
Share based payments - - - 45 - 45
Dividends paid - - - (125) - (125)
Total transactions with owners - - - (92) - (92)
Balance at 31 March 2022-restated 1,251 17,590 703 21,378 (97) 40,825
Profit for the year - - - 3,122 - 3,122
Amortisation of hedge reserve - - - - 13 13
Deferred tax on share options - - - (3) - (3)
and other financial liabilities
Re-measurement of the defined - - - 377 - 377
benefit pension liability, net of tax
Total comprehensive income - - - 3,496 13 3,509
Transactions with owners in their capacity as owners:
Share based payments - - - 41 - 41
Dividends paid - - - (401) - (401)
Total transactions with owners - - - (360) - (360)
Balance at 31 March 2023 1,251 17,590 703 24,514 (84) 43,974
The accompanying notes form part of these Financial Statements.
Company Statement of Changes in Shareholders' Equity
FOR THE YEAR ENDED 31 MARCH 2023
Equity share Share premium account £'000 Other reserves Retained earnings Hedge Reserve Total equity
capital £'000 £'000 £'000 £'000
£'000
Balance at 1 April 2021-restated 1,251 17,590 5,389 17,975 (232) 41,973
Profit for the year - - - 245 - 245
Cash flow hedges: effective portion - - - - 172 172
of changes in fair value
Amortisation of hedge reserve - - - - 3 3
Deferred tax on cash flow hedges - - - - (40) (40)
Total comprehensive loss - - - 245 135 380
Transactions with owners in their capacity as owners:
Share option exercise - - - (12) - (12)
Share based payments - - - 45 - 45
Dividends paid - - - (125) - (125)
Total transactions with owners - - - (92) - (92)
Balance at 31 March 2022-restated 1,251 17,590 5,389 18,128 (97) 42,261
Profit for the year - - - 440 - 440
Amortisation of hedge reserve - - - - 13 13
Total comprehensive income - - - 440 13 453
Transactions with owners in their capacity as owners:
Share based payments - - - 42 42
Dividends paid - - - (401) - (401)
Total transactions with owners - - - (359) - (359)
Balance at 31 March 2023 1,251 17,590 5,389 18,209 (84) 42,355
The accompanying notes form part of these Financial Statements.
Notes to the Financial Statements
1. Accounting policies
General information
FIH group plc (the "Company") is a public company limited by shares
incorporated and domiciled in the UK.
Reporting entity
The Group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group"). The Parent Company
financial statements present information about the Company as a separate
entity and not about its Group. The consolidated financial statements of the
Group for the year ended 31 March 2023 were authorised for issue in accordance
with a resolution of the directors on 3 August 2023.
Basis of preparation
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 March 2023 or 2022 but is derived
from those accounts. Statutory accounts for the year ended 31 March 2022 have
been delivered to the registrar of companies, and those for the year ended 31
March 2023 will be delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006. These condensed preliminary
financial statements have been prepared in accordance with the recognition and
measurement requirements of UK-adopted international financial reporting
standards in conformity with the requirements of the Companies Act 2006, in
line with the Group's statutory accounts.
Both the Parent Company financial statements and the Group financial
statements have been prepared in accordance with UK-adopted International
Accounting Standards ("Adopted IFRS"). On publishing the Parent Company
financial statements together with the Group financial statements, the Company
is taking advantage of the exemption in s408 of the Companies Act 2006 not to
present its individual income statement and related notes that form a part of
the approved financial statements.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these consolidated financial
statements.
Judgements made by the directors in the application of these accounting
policies that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment next year are
discussed in note 30.
The financial statements are presented in pounds sterling, rounded to the
nearest thousand and are prepared on the historical cost basis, as modified by
the revaluation of certain financial instruments held at fair value.
The cash flows between the parent Company and its subsidiaries have been
classified as either financing or investing activities, depending on whether
they relate to subsidiaries in a net payable or net receivable position
respectively.
Going concern
The directors are responsible for preparing a going concern assessment
covering a period of at least 12 months with the directors having assessed the
period to 31st of March 2025 (the going concern period). The financial
statements have been prepared on a going concern basis which the directors
consider to be appropriate for the following reasons.
As at 31 March 2023 the Group had net current assets of £14.8 million, cash
balances of £12.8 million and net debt of approximately £7.5 million.
1. Accounting policies (continued)
Cash flow forecasts for the Group have been prepared covering the going
concern period and the directors have considered downside scenarios to the
base case forecasts to reflect emerging risks and uncertainties as a result of
global economic conditions. The base case and sensitised forecasts indicate
that the business will be cash generative over this period and that the Group
will comply with its covenants and have sufficient funds to meet its
liabilities as they fall due throughout the going concern period.
Consequently, the directors are confident that the Group and Company will have
sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and the
financial statements have therefore been prepared on a going concern basis.
Restatement
The prior year financial information for the following areas was restated as
set out below.
Right of use assets
The seabed lease in PHFC contains variable rental payments which are reset
every five years based on the revenue of the ferry business. This lease was
previously incorrectly accounted for as one 50-year lease with all future
expected payments over the period of the lease reflected in the measurement of
the liability. The liability has been restated as an element of the future
lease payments varies with the revenue of PHFC and should not have been
reflected in the measurement of the liability. The lease liability will be
remeasured in the future when variable payments become fixed. The impact of
this was an increase in opening retained earnings at 1 April 2021 of £0.2
million and reductions in property, plant and equipment, and interest-bearing
loans and borrowings of £0.8 million and £1.0 million respectively. The
impact at 31 March 2022 was an increase in retained earnings of £0.2 million
and reductions in property, plant and equipment and interest-bearing loans and
borrowings of £0.4 million and £0.6 million respectively. There was no
impact on profit for the year ended 31 March 2022.
Impairment of investment in Company
During the year, it was identified that the parent company's investment in
Momart had been incorrectly impaired in the year ended 31 March 2020. As a
result, the previously recorded impairment charge of £5.1m has been reversed
at 31 March 2021. It was also noted that the parent Company's investment in
Erebus Limited should have been fully impaired in a year prior to 1 April
2021. Consequently, an impairment of £2.4 million was recorded at 1 April
2021. The net impact of these adjustments was to increase investments and
retained earnings by £2.7m at both 31 March 2021 and 31 March 2022. There was
no impact on profit for the year ended 31 March 2022.
Hedge accounting
Following a reassessment of the criteria for applying hedge accounting after
the benchmark change from LIBOR to SONIA, it was concluded that the hedging
criteria were no longer met. Hedge accounting was therefore discontinued from
1 January 2022, resulting in a credit of £0.5 million to the prior year
profit and loss (comprising a £0.7m credit to net finance income and a £0.2m
charge to tax expense) which was previously incorrectly accounted for in the
hedging reserve. The impact on both basic and diluted EPS in the year to 31
March 2022 was an increase of 4.3p.
Basis of consolidation
The consolidated financial statements comprise the financial statements of FIH
group plc and its subsidiaries (the "Group"). A subsidiary is any entity FIH
group plc has the power to control. Control is determined by FIH group plc's
exposure or rights, to variable returns from its involvement with the
subsidiary and the ability to affect those returns through its power over the
subsidiary. The financial statements of subsidiaries are prepared for the same
reporting period as the Parent Company. The accounting policies of
subsidiaries have been changed when necessary, to align them with the policies
adopted by the Group.
Subsidiaries are consolidated from the date on which control is transferred to
the Group and cease to be consolidated from the date on which control is
transferred out of the Group.
All intra-company balances and transactions, including unrealised profits
arising from intra-group transactions, are eliminated in full in preparing the
consolidated financial statements. Investments in subsidiaries within the
Company balance sheet are stated at impaired cost.
1. Accounting policies (continued)
Presentation of income statement
Due to the non-prescriptive nature under IFRS as to the format of the income
statement, the format used by the Group is explained below.
Operating profit is the pre-finance profit of continuing activities and
acquisitions the Group, and in order to achieve consistency and comparability,
is analysed to show separately the results of normal trading performance
("underlying profit"), individually significant charges and credits, changes
in the fair value of financial instruments and non-trading items. Such items
arise because of their size or nature.
In the year ended 31 March 2023, non-trading items were made up of £79,000
redundancy costs. In the year ended 31 March 2022, non-trading items were made
up of £300,000 of people-related restructuring costs including employee
redundancies and compensation payable to the former Chief Executive. Fair
value movements on hedging items are included as a non-trading finance
income/cost.
Foreign currencies
Transactions in foreign currencies are translated to the functional currencies
of Group entities at exchange rates ruling at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are
retranslated to the functional currency using the relevant rates of exchange
ruling at the balance sheet date and the gains or losses thereon are included
in the income statement.
Non-monetary assets and liabilities are translated using the exchange rate at
the date of the initial transaction.
Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated
depreciation and impairment losses. Cost comprises purchase price and directly
attributable expenses. Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. The estimated useful lives are as follows:
Right of use assets 5 - 50 years
20 - 50 years
Freehold buildings
Long leasehold land and buildings 50 years
Vehicles, plant and equipment 4 - 10 years
Ships 15 - 30 years
The carrying value of assets and their useful lives are reviewed, and adjusted
if appropriate, at each balance sheet date. If an indication of impairment
exists, the assets are written down to their recoverable amount and the
impairment is charged to the income statement in the period in which it
arises. Freehold land and assets under construction are not depreciated.
Investment properties - Group
Investment properties are properties held either to earn rental income or for
capital appreciation or for both. Investment properties are measured at cost
less accumulated depreciation and impairment losses. Cost comprises purchase
price and directly attributable expenses. Depreciation is charged to the
income statement on a straight-line basis over the estimated useful lives of
each property. The investment property portfolio in the Falkland Islands
consists mainly of properties built by FIC, and these and the properties
purchased are depreciated over an estimated useful life of 50 years.
1. Accounting policies (continued)
Investment properties - Company
The investment property in the Company consists of the Leyton site purchased
in December 2018, with five warehouses which are rented to Momart. The
purchase price allocated to land has not been depreciated, and the purchase
price allocated to each property has been depreciated on a straight-line basis
over an estimated useful life of 40 years, after consideration of the age and
condition of each property, down to an estimated residual value of nil.
The carrying value of assets and their useful lives are reviewed, and adjusted
if appropriate, at each balance sheet date. If an indication of impairment
exists, the assets are written down to their recoverable amount and the
impairment is charged to the income statement in the period in which it
arises. Freehold land is not depreciated.
Joint Ventures
Jointly controlled entities are those entities over whose activities the Group
has joint control, established by contractual agreement and requiring the
joint venture partners' unanimous consent for strategic financial and
operating decisions. FIH group plc has joint control over an investee when it
has exposure or rights to variable returns from its involvement with the joint
venture and has the ability to affect those returns through its joint power
over the entity.
Jointly controlled entities are accounted for using the equity method (equity
accounted investees) and are initially recognised at cost. The consolidated
financial statements include the Group's share of the total comprehensive
income and equity movements of equity accounted investees, from the date that
significant influence or joint control commences until the date that
significant influence or joint control ceases. When the Group's share of
losses exceeds its interest in an equity accounted investee, the Group's
carrying amount is reduced to nil and recognition of further losses is
discontinued except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of an investee.
Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and businesses.
Acquisitions prior to 1 April 2006
In respect of acquisitions prior to transition to IFRS, goodwill is recorded
on the basis of deemed cost, which represents the amount recorded under
previous Generally Accepted Accounting Principles ("GAAP") as at the date of
transition. Goodwill is not amortised but reviewed for impairment annually, or
more frequently, if events or changes in circumstances indicate that the
carrying value may be impaired. At 31 March 2023, all goodwill arising on
acquisitions prior to 1 April 2006 has either been offset against other
reserves on acquisition, or written off through the income statement as an
impairment in prior years.
Acquisitions on or after 1 April 2006
Goodwill on acquisition is initially measured at cost, being the excess of the
cost of the business combination over the acquirer's interest in the fair
value of the identifiable assets, liabilities and contingent liabilities of
the acquired business. Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses. Goodwill is not amortised but
reviewed for impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. Amortisation
is charged to the income statement on a straight-line basis over the estimated
useful lives of intangible assets unless such lives are indefinite. Other
intangible assets are amortised from the date they are available for use. In
the year ended 31 March 2014, the directors reviewed the life of the brand
name at Momart and after considerations of its strong reputation in a niche
market and its history of stable earnings and cash flow, which is expected to
continue into the foreseeable future, determined that its useful life is
indefinite, and amortisation ceased from 1 October 2013.
1. Accounting policies (continued)
Computer software
Acquired computer software is capitalised as an intangible asset on the basis
of the cost incurred to acquire and bring the specific software into use.
Amortisation is charged to the income statement on a straight-line basis over
the estimated useful lives of intangible assets from the date that they are
available for use. The estimated useful life of computer software is seven
years.
Impairment of non-financial assets
At each reporting date the Group assesses whether there is any indication that
an asset may be impaired. Goodwill and intangible assets with indefinite lives
are tested for impairment, at least annually. Where an indicator of impairment
exists or the asset requires annual impairment testing, the Group makes a
formal estimate of the recoverable amount. Where the carrying amount of an
asset exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. Impairment losses are recognised in
the income statement.
Recoverable amount is the greater of an asset's or cash-generating unit's fair
value, less cost to sell or value in use. It is determined for an individual
asset, unless the asset's value in use cannot be estimated and it does not
generate cash inflows that are largely independent of those from other assets
or groups of assets, in which case the recoverable amount is determined for
the cash-generating unit to which the asset belongs. In assessing value in
use, the estimated future cash flows are discounted to their present value
using a discount rate that reflects current market assessments of the time
value of money and risks specific to the asset.
An impairment loss in respect of goodwill is not reversed. In respect of other
assets, impairment losses are reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
Finance income and expense
Net financing costs comprise interest payable and interest receivable which
are recognised in the income statement. Interest income and interest payable
are recognised as a profit or loss as they accrue, using the effective
interest method.
Employee share awards
The Group provides benefits to certain employees (including directors) in the
form of share-based payment transactions, whereby the recipient renders
service in return for shares or rights over future shares ("equity settled
transactions"). The cost of these equity settled transactions with employees
is measured by reference to an estimate of their fair value at the date on
which they were granted using an option input pricing model taking into
account the terms and conditions upon which the options were granted. The
amount recognised as an expense is adjusted to reflect the actual number of
share options for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately recognised
as an expense is based on the number of share options that meet the related
service and non-market performance conditions at the vesting date. For
share-based payment awards with market performance vesting conditions, the
grant date fair value of the share-based payments is measured to reflect such
conditions and there is no true up for differences between expected and actual
outcomes.
The cost of equity settled transactions is recognised, together with a
corresponding increase in reserves, over the period in which the performance
conditions are fulfilled, ending on the date that the option vests. Where the
Company grants options over its own shares to the employees of subsidiaries,
it recognises, in its individual financial statements, an increase in the cost
of investment in its subsidiaries equal to the equity settled share-based
payment charge recognised in its consolidated financial statements with the
corresponding credit being recognised directly in equity.
1. Accounting policies (continued)
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
includes all costs incurred in bringing each product to its present location
and condition. The cost of raw materials, consumables and goods for resale
comprises purchase cost, on a weighted average basis and where applicable
includes expenditure incurred in transportation to the Falkland Islands.
Work-in-progress and finished goods cost includes direct materials and labour
plus attributable overheads based on a normal level of activity.
Construction-in-progress is stated at the lower of cost and net realisable
value. Net realisable value is estimated at selling price in the ordinary
course of business less costs of disposal.
Pensions
Defined contribution pension schemes
The Group operates defined contribution schemes at PHFC and Momart, and at FIC
employees are enrolled in the Falkland Islands Pension Scheme ("FIPS"). The
assets of all these schemes are held separately from those of the Group in
independently administered funds. The amount charged to the income statement
represents the contributions payable to the schemes in respect to the
accounting period.
Defined benefit pension schemes
The Group has one pension scheme providing benefits based on final pensionable
pay, which is unfunded and closed to further accrual. The Group's net
obligation in respect of the defined benefit pension plan is calculated by
estimating the amount of future benefit that employees have earned in return
for their service in the current and prior periods; that benefit is discounted
to its present value. The liability discount rate is the yield at the balance
sheet date on AA credit-rated bonds that have maturity dates approximating the
terms of the Group's obligations. The calculation is performed by a qualified
actuary using the projected unit credit method.
The current service cost and costs from settlements and curtailments are
charged against operating profit. Past service costs are recognised
immediately within profit and loss. The net interest cost on the defined
benefit liability for the period is determined by applying the discount rate
used to measure the defined benefit obligation at the end of the period to the
net defined benefit liability at the beginning of the period. It takes into
account any changes in the net defined benefit liability during the period.
Re-measurements of the defined benefit pension liability are recognised in
full in the period in which they arise in the statement of comprehensive
income.
Trade and other receivables
Trade receivables are initially recorded at transaction price and are
subsequently carried at amortised cost, less provision for impairment. Any
change in their value through impairment or reversal of impairment is
recognised in the income statement.
Trade and other payables
Trade and other payables are stated at their cost less payments made.
Dividends
Dividends unpaid at the balance sheet date are only recognised as liabilities
at that date to the extent that they are appropriately authorised and are no
longer at the discretion of the Company.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash balances and call
deposits with an original maturity of three months or less.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
directly attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in the income statement
over the period of the borrowings on an effective interest basis.
1. Accounting policies (continued)
Taxation
Taxation on the profit or loss for the year comprises current and deferred
tax. Current tax is recognised in the income statement, except to the extent
that it relates to items recognised directly in equity, in which case it is
recognised directly in equity or in other comprehensive income. Current tax is
the expected tax payable on the taxable income for the year, using tax rates
enacted, or substantively enacted at the balance sheet date, and any
adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet method, providing for
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes.
The following temporary timing differences are not recognised:
· Goodwill not deductible for tax purposes; and
· Initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither accounting nor
taxable profits.
· Temporary differences related to investments in subsidiaries, to
the extent that it is probable that they will not reverse in the foreseeable
future.
A deferred tax asset is recognised to the extent that it is probable that
future taxable profits will be available against which the temporary
differences can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realised. Deferred tax is recognised at
the tax rates that are expected to be applied to the temporary differences
when they reverse, based on rates that have been enacted or substantially
enacted by the reporting date.
Cash-flow hedges
The effective portions of changes in the fair values of derivatives that are
designated and qualify as cash-flow hedges are recognised in equity. The gain
or loss to any ineffective portion is recognised immediately in the income
statement. Amounts accumulated in the hedging reserve are recycled to the
income statement in the periods when the hedged items will affect profit or
loss.
Revenue recognition
IFRS 15 Revenue, requires revenue to be recognised under a 'five-step'
approach when a customer obtains control of goods or services in line with the
performance obligations identified on the contract. Under IFRS 15, revenue
recognition must reflect the standard's five-step approach which requires the
following:
· Identification of the contract with the customer;
· Identification of the performance obligations in the contract;
· Determination of the transaction price;
· Allocation of the transaction price to the performance
obligations;
· Recognition of the revenue when (or as) each performance
obligation is satisfied.
In accordance with the standard, revenue is recognised, net of discounts, VAT,
Insurance Premium Tax and other sales related taxes, either at the point in
time a performance obligation has been satisfied or over time as control of
the asset associated with the performance obligation is transferred to the
customer.
For all contracts identified, the Group determines if the arrangement with the
customer creates enforceable rights and obligations. For contracts with
multiple components to be delivered, such as the inbound and outbound leg of
moving art exhibitions as well as delivering, handling and administration
services, management applies judgement to consider whether those promised
goods and services are:
· distinct - to be accounted for as separate performance
obligations;
· not distinct - to be combined with other promised goods or
services until a bundle is identified that is distinct; or
· part of a series of distinct goods and services that are
substantially the same and have the same pattern of transfer to the customer.
1. Accounting policies (continued)
At contract inception the total transaction price is identified, being the
amount to which the Group expects to be entitled and to which it has present
enforceable rights under the contract. Once the total transaction price is
determined, the Group allocates this to the identified performance obligations
in proportion to their relative standalone selling prices and revenue is then
recognised when (or as) those performance obligations are satisfied.
Discounts are allocated proportionally across all performance obligations in
the contract unless directly observable evidence exists that the discount
relates to one or more, but not all, performance obligations.
For each performance obligation, the Group determines if revenue will be
recognised over time or at a point in time. For each performance obligation to
be recognised over time, the Group applies a revenue recognition method that
faithfully depicts the Group's performance in transferring control of the
goods or services to the customer. This decision requires assessment of the
nature of the goods or services that the Group has promised to transfer to the
customer.
Revenue streams of the Group
The revenues streams of the Group have been analysed and considered in turn.
Retail revenues arising from the sale of goods and recognised at the point of
sale
The retail revenues in the Falkland Islands arise from the sale of goods in
the retail outlets and the sale of vehicles and parts at Falklands 4x4, are
recognised at the point of sale, which is usually at the till, when the goods
are paid for by cash or credit or debit card. A finance lease receivable
arises on the sale of goods when the Group provides finance for the purchases
as the Group is considered under IFRS 16, to be a dealer lessor.
Housing revenue is generally recognised on completion of the single
performance obligation of supplying a house, once the keys are handed over on
legal completion. However, larger contracts such as the construction of houses
for FIG are treated as long term construction contracts as detailed below.
Transportation of art
In the UK, Momart earns revenue from fine art logistical services (transport,
installations or de-installations) and storage services. Revenue is recognised
for logistical services completed. Momart classifies this income into either
Museum Exhibitions revenue, which includes the income from UK and
International museums, or Gallery Services revenue, which includes revenue
earned from art galleries and auction houses. Inbound and outbound
installations are treated as separate obligations. Revenue is recognised when
the service is completed.
Revenues arising from the rendering of services and recognised over a period
of time
Storage of art
Storage revenue is recognised according to the time in storage, as reflected
in storage agreements.
Long term construction contracts
Revenue from long term construction contracts is recognised under IFRS 15 by
the application of the input method on the basis that the nature of the
construction contracts which the Group typically enters into is such that work
performed creates or enhances an asset which the customer controls.
Construction contract revenue is measured using the direct measurement of the
goods or services provided to date, including materials and labour.
Un-invoiced amounts are presented as contract assets and amounts invoiced in
advance of delivery are presented as contract liabilities.
Where a modification is required, the Group assesses the nature of the
modification and whether it represents a separate performance obligation
required to be satisfied by the Group or whether it is a modification to the
existing performance obligation.
1. Accounting policies (continued)
Other revenues recognised over time
Other revenues recognised over time, include rental income from the rental
property portfolio at FIC, which is recognised monthly as the properties are
occupied, and car hire income which is recognised over the hire period.
The majority of revenues recognised immediately from the rendering of services
arise from the PHFC fare income, which is taken on a daily basis for daily
tickets. Season tickets are available, however the revenue earned from these
is negligible as most passengers purchase daily tickets. Quarterly and monthly
season tickets are recognised over the life of the ticket with a balance held
in deferred income.
Other revenues arising from the rendering of services and recognised
immediately include:
· Agency services provided to cruise or fishing vessels for
supplying provisions, trips to and from the airport and medical evacuations;
· Third party port services;
· Car maintenance revenue, which generally arises on short term
jobs;
· Penguin travel income earned from tourist tours and airport
trips, which is recognised on the day of the tour or airport trip;
· Third party freight revenue, which is recognised when the ship
arrives in the Falkland Islands;
· Insurance commission earned by FIC for providing insurance
services in the Falkland Islands under the terms of an agency agreement with
Caribbean Alliance. The insurance commission is recognised in full on
inception of each policy, offset by a refund liability held within accruals,
for the expected refunds over the next year calculated from a review of the
historic refunded premiums.
IFRS 9 Financial instruments
Impairment
Financial assets, which include trade debtors and finance lease receivables,
are held initially at cost. IFRS 9 mandates the use of an expected credit loss
model to calculate impairment losses rather than an incurred loss model, and
therefore it is not necessary for a credit event to have occurred before
credit losses are recognised.
The Group has elected to measure loss allowances utilising
probability-weighted estimates of credit losses for trade receivables at an
amount equal to lifetime expected credit losses.
IFRS 9 Financial instruments
Hedging
The Group has one open hedging relationship at 31 March 2023, which has two
elements; an interest rate swap and an embedded 0% interest rate floor. This
contract commenced on 9(th) December 2021, as a result of the banking industry
moving from LIBOR to SONIA as the basis for determining interest rates. This
contract replaced the previous interest swap taken out in July 2019 to hedge
the £13,875,000 mortgage. This swap had an initial notional value of
£13,875,000, with interest payable at the difference between 1.1766% and the
LIBOR rate up until December 2021 when the LIBOR reference rate was replaced
with a SONIA based equivalent. This interest rate swap notional value
decreases at £125,000 per quarter over ten years until June 2029 when it will
expire. The notional value of the swap at 31 March 2023 was £12,000,000
(2022: £12,500,000). The asset held in respect of this swap at the year-end
was £1,559,000 (2022: £644,000). The movement in the year reflects
anticipated interest rate rises over the remaining period of the swap.
IFRS 9 introduces three hedge effectiveness requirements:
IFRS 9 requires the existence of an economic relationship between the hedged
item and the hedging instrument. There must be an expectation that the value
of the hedging instrument and the value of the hedged item would move in the
opposite direction as a result of the common underlying or hedged risk. As the
LIBOR, SONIA and base rates increase, the interest payable on the loans will
increase, and the interest payable on the swaps will fall.
The hedge accounting model is based on a general notion of there being an
offset between the changes of the swap as the hedging instrument and those of
the hedged bank loan, both of these balances will be affected by the base rate
movements, so it has been concluded the offset is justifiable. The size of the
hedging instrument and the hedged items must be similar for the hedge to be
effective.
1. Accounting policies (continued)
IFRS 16 Leases
The Group has applied IFRS 16 in accounting for leases as follows.
At inception of a contract, the Group assesses whether it is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the
use of an identified asset, the Group uses the definition of a lease in IFRS
16.
IFRS 16 determines whether a contract contains a lease on the basis of whether
the customer has the right to control the use of an identified asset for a
period of time in exchange for consideration. This is in contrast to the focus
on 'risks and rewards' in IAS 17. The Group applies the definition of a lease
and related guidance set out in IFRS 16 to all lease contracts entered into or
changed on or after 1 January 2019 (whether it is a lessor or a lessee in the
lease contract).
(a) As a lessee
The Group:
a) Recognises right-of-use assets and lease liabilities in the consolidated
statement of financial position, initially measured at the present value of
the future lease payments;
b) Recognises depreciation of right-of-use assets and interest on lease
liabilities in the consolidated statement of profit or loss;
c) Separates the total amount of cash paid into a principal portion
(presented within financing activities) and interest (presented within
financing activities) in the consolidated statement of cash flows.
Lease incentives (e.g. rent-free periods) are recognised as part of the
measurement of the right-of-use assets and lease liabilities.
For short-term leases (lease term of 12 months or less) and leases of
low-value assets (which includes tablets and personal computers, small items
of office furniture and telephones), the Group has opted to recognise a lease
expense on a straight-line basis as permitted by IFRS 16. This expense is
presented within 'other expenses' in profit or loss.
Right-of-use assets are tested for impairment in accordance with IAS 36 as
specified by IFRS16.
(b) As a lessor
In accordance with IFRS 16, leases where the Group is a lessor continue to be
classified as either finance leases or operating leases and are accounted for
differently.
When goods are purchased on finance, a finance lease receivable is recorded in
FIC and the goods are removed from the balance sheet when the finance lease
agreements are signed and instead, a receivable due from the customer is
recorded, as the title of the vehicle, or other goods, such as furniture,
white goods or other electrical items, are deemed to have passed to the
customer at that point.
Finance lease receivables are shown in the balance sheet under current assets
to the extent they are due within one year, and under non-current assets to
the extent that they are due after more than one year, and are stated at the
value of the net investment in the agreements. Finance lease income is
allocated to accounting periods so as to reflect a constant periodic rate of
return on the Group's net investment outstanding in respect of the leases.
The FIC rental property agreements which are only ever for a maximum of 12
months, and with titles that will never pass to the customer, continue to be
classified as operating leases. Rental income from operating leases is
recognised on a straight-line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging an operating lease
are added to the carrying amount of the leased asset and recognised on a
straight-line basis over the lease term. The rental property portfolio, which
is held for leasing out under operating leases is included in investment
property at cost less accumulated depreciation and impairment losses.
Standards and revisions not yet adopted in the year to 31 March 2023
No standards not yet adopted are expected to have any significant impact on
the financial statements of the Group or Company.
2. Segmental Information Analysis
The Group is organised into three operating segments, and information on these
segments is reported to the chief operating decision maker ('CODM') for the
purposes of resource allocation and assessment of performance. The CODM has
been identified as the executive directors.
The operating segments offer different products and services and are
determined by business type: goods and essential services in the Falkland
Islands, the provision of ferry services and art logistics and storage.
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the period to
acquire property, plant and equipment and intangible assets other than
goodwill and any other assets purchased through the acquisition of a business.
2023
General Ferry Art Logistics Unallocated Total
Trading Services and Storage
(Falkland Islands) (Portsmouth) (UK)
£'000 £'000 £'000 £'000 £'000
Revenue 29,383 3,817 19,512 - 52,712
Segment operating profit before non-trading items 1,955 608 1,450 - 4,013
- - (79) - (79)
Non-trading items
Profit before net financing costs 1,955 608 1,371 - 3,934
Finance income - - 3 907 910
Finance expense (70) (287) (441) - (798)
1,885 321 933 907 4,046
Segment profit before tax
Assets and liabilities
Segment assets 35,933 9,519 33,889 4,877 84,218
Segment liabilities (12,954) (7,341) (19,364) (585) (40,244)
Segment net assets 22,979 2,178 14,525 4,292 43,974
Other segment information
Capital expenditure:
Property, plant and equipment 1,115 205 539 - 1,859
Investment properties 10 - - - 10
Computer software 81 - 34 - 115
Total Capital expenditure 1,206 205 573 - 1,984
Depreciation and amortisation:
Property, plant and equipment 1,192 317 256 - 1,765
Investment properties 210 - - - 210
Computer software - - 10 - 10
Right of use assets 39 101 515 - 655
Total Depreciation and Amortisation 1,441 418 781 - 2,640
Underlying profit
Segment operating profit before non-trading items 1,955 608 1,450 - 4,013
Interest income - - 3 - 3
Interest expense (70) (287) (441) - (798)
Underlying profit before tax 1,885 321 1,012 - 3,218
2. Segmental Information Analysis (continued)
2022
General Ferry Art Logistics Unallocated Total
Trading Services and Storage
(Falkland Islands) (Portsmouth) (UK)
£'000 £'000 £'000 £'000 £'000
Revenue 21,655 3,066 15,598 - 40,319
Segment operating profit before non-trading items 1,835 155 1,090 - 3,080
- - (41) (259) (300)
Non-trading items
Profit / (loss) before net financing costs 1,835 155 1,049 (259) 2,780
Finance expense (56) (276) (464) 704 (92)
1,779 (121) 585 445 1,984
Segment profit / (loss) before tax
Assets and liabilities
Segment assets 31,401 9,478 32,275 5,065 78,219
Segment liabilities (9,582) (7,788) (19,045) (979) (37,394)
Segment net assets 21,819 1,690 13,230 4,086 40,825
Other segment information
Capital expenditure:
Property, plant and equipment 1,129 52 258 - 1,439
Investment properties 1,238 - - - 1,238
Computer software 67 - - - 67
Total Capital expenditure 2,434 52 258 - 2,744
Capital expenditure: cash 2,434 52 152 - 2,638
Capital expenditure: non-cash - - 106 - 106
Total Capital expenditure 2,434 52 258 - 2,744
Depreciation and amortisation:
Property, plant and equipment 834 316 423 - 1,573
Investment properties 197 - - - 197
Computer software - - 21 - 21
Right of use assets 8 256 505 - 769
Total Depreciation and Amortisation 1,039 572 949 - 2,560
Underlying profit / (loss)
Segment operating profit before non-trading items 1,835 155 1,090 - 3,080
Interest expense (56) (276) (464) - (796)
Underlying profit / (loss) before tax 1,779 (121) 626 - 2,284
2. Segmental Information Analysis (continued)
The £4,877,000 (2022: £5,065,000) unallocated assets above include
£3,307,000 (2022: £4,376,000) of cash and £1,559,000 (2022: £644,000) of
derivative financial instruments and £11,000 (2022: £45,000) of trade and
other receivables held in FIH group plc. (Note 19)
The £585,000 (2022: £979,000) unallocated liabilities above consist of
accruals and tax balances held within FIH group plc.
3. Geographical analysis
The tables below analyse revenue and other information by geography:
2023
United Falkland Islands Total
Kingdom
£'000 £'000 £'000
Revenue (by source) 23,329 29,383 52,712
Assets and Liabilities:
Non-current segment assets, excluding deferred tax 36,518 16,956 53,474
Capital expenditure: cash 778 1,206 1,984
2022
United Falkland Islands Total
Kingdom
£'000 £'000 £'000
Revenue (by source) 18,664 21,655 40,319
Assets and Liabilities:
Non-current segment assets, excluding deferred tax* 35,709 17,074 52,783
Capital expenditure: cash 204 2,434 2,638
* The amounts disclosed in relation to segment assets have been restated as
detailed in note 1 to the financial statements, resulting in a reduction of
£0.4 million in carrying values.
4. Revenue
2023
Sale of goods recognised at a point in time Rendering of services recognised at a point in time Rendering of services provided over a period of time Total
Revenue
£'000 £'000 £'000 £'000
Falkland Islands
Retail sales 9,937 - - 9,937
Falklands 4x4 sales 2,275 294 485 3,054
FBS (housing and construction) 1,943 - 10,204 12,147
Support Services - 2,423 827 3,250
Rental property income - - 995 995
FIC (Falkland Islands) 14,155 2,717 12,511 29,383
PHFC (Portsmouth) - 3,817 - 3,817
Art logistics and storage - 16,794 2,718 19,512
Total Revenue 14,155 23,328 15,229 52,712
2022
Sale of goods recognised at a point in time Rendering of services recognised at a point in time Rendering of services provided over a period of time Total
Revenue
£'000 £'000 £'000 £'000
Falkland Islands
Retail sales 9,666 - - 9,666
Falklands 4x4 sales 2,034 372 364 2,770
FBS (housing and construction) 1,499 - 4,298 5,797
Support Services - 1,677 868 2,545
Rental property income - - 877 877
FIC (Falkland Islands) 13,199 2,049 6,407 21,655
PHFC (Portsmouth) - 3,066 - 3,066
Art logistics and storage* - 13,225 2,373 15,598
Total Revenue 13,199 18,340 8,780 40,319
* The amount disclosed for rendering of services recognised over a period of
time relating to the prior year for the Art and Logistics Business has been
restated to exclude £13.2 million which should have been included within
rendering of services recognised at a point in time. The total recognised for
the year has not changed.
5. Non-trading items
2023 2022
£'000 £'000
Profit before tax as reported 4,046 2,688
Non-trading items:
Restructuring costs 79 300
Movement in fair value of non-effective portion of derivative financial (907) (704)
instruments
Underlying profit before tax 3,218 2,284
Restructuring costs comprise employee redundancy costs in the current year and
people-related costs, including employee redundancies and compensation payable
to the former Chief Executive, in the prior year.
6. Expenses and auditor's remuneration
The following expenses / (income) have been included in the profit and loss
2023 2022
£'000 £'000
Direct operating expenses of rental properties 463 465
Depreciation 2,627 2,413
Amortisation of computer software 10 21
Foreign currency loss 26 13
Expected credit loss on trade and other receivables 13 114
Cost of inventories recognised as an expense 14,392 9,868
COVID-19 and other government funding - (500)
Auditor's remuneration 2023 2022
£'000 £'000
Audit of these financial statements 195 66
Audit of subsidiaries' financial statements pursuant to legislation 102 179
Other assurance services - 5
Total auditor's remuneration 297 250
Additional items of expenditure not covered above or within staff costs (note
7) which are recognised within operating profit for the year include legal and
professional fees, insurance and recruitment costs.
7. Staff numbers and cost
The average number of persons employed by the Group (including directors)
during the year, analysed by category, was as follows:
Number of employees Number of employees
Group Company
2023 2022 2023 2022
PHFC 27 27 - -
Falkland Islands: in Stanley 227 208 - -
in UK 6 6 - -
Art logistics & storage 114 102 -
Head office 6 7 8 7
Total average staff numbers 380 350 8 7
The aggregate payroll cost of these persons was as follows:
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Wages and salaries 13,929 12,682 780 769
Share-based payments (see note 24) 41 45 46 45
Social security costs 986 821 86 90
Contributions to defined contribution plans (see note 23) 535 505 14 5
Furlough income - (210) - -
Total employment costs 15,491 13,843 926 909
In the previous year, the Group made use of support schemes from the UK
Government to partially mitigate the loss of profit caused by the impact of
COVID-19. The Coronavirus Job Retention Scheme ("CJRS"), the UK Government's
support measure relating to employment, provided grants to cover the cost of
employees who were furloughed. Amounts received under this scheme are
classified as government grants and are accounted for in accordance with IAS
20 Government Grants. There were no grants in the year ended 31 March 2023.
Such grants totalling £210,000 for the year ended 31 March 2022 were
recognised in the Income Statement in the period in which the associated costs
for which the grants are intended to compensate were incurred, and are
presented as an offset against those associated costs.
Details of audited directors' remuneration are provided in the Directors'
Report, which forms part of these audited financial statements, under the
heading 'Details of Directors' Remuneration and Emoluments'.
8. Finance income and expense
2023 2022
£'000 £'000
Movement in non-effective portion of fair value of derivative financial 907 704
instruments
Bank interest receivable 3 -
Total finance income 910 704
Interest payable on bank loans (424) (436)
Net interest cost on the FIC defined benefit pension scheme liability (70) (56)
Lease liabilities finance charge (304) (304)
Total finance expense (798) (796)
Net finance income / (expense) 112 (92)
9. Taxation
Recognised in the income statement
2023 2022
£'000 £'000
Current tax expense
Current year 579 532
Adjustments for prior years (99) (25)
Current tax expense* 480 507
Deferred tax expense
Origination and reversal of temporary differences* 413 123
Change in UK tax rate to 25% - 523
Adjustments for prior years 31 50
Deferred tax expense (see note 17)* 444 696
Total tax expense* 924 1,203
Reconciliation of the effective tax rate
2023 2022
£'000 £'000
Profit on ordinary activities before tax 4,046 2,688
Tax using the UK corporation tax rate of 19% (2021: 19%) 769 511
Expenses not deductible for tax purposes 85 84
Additional capital allowances - super deduction (37) (7)
Effect of increase in rate of deferred tax 155 555
Effect of higher tax rate overseas 20 35
Adjustments to tax charge in respect of previous periods (68) 25
Total tax expense* 924 1,203
* Prior year amounts relating to deferred tax have been restated to align the
tax impact with the changes made to fair value movements of the derivative
financial instrument as detailed in note 1 to the financial statements.
Tax recognised directly in other comprehensive income
2023 2022
£'000 £'000
Deferred tax on effective portion of changes in fair value - 40
Movement on deferred tax asset relating to the pension scheme 176 62
Deferred tax on share options and other financial liabilities 3 (58)
Deferred tax expense recognised directly in other comprehensive income 179 44
In the UK, deferred tax has been calculated at 25% (2022: 25%).
The deferred tax assets and liabilities in FIC have been calculated at the
Falkland Islands' tax rate of 26% (2022: 26%).
10. Earnings per share
The calculation of basic earnings per share is based on profits on ordinary
activities after taxation, and the weighted average number of shares in issue
in the period.
The calculation of diluted earnings per share is based on profits on ordinary
activities after taxation and the weighted average number of shares in issue
in the period, adjusted to assume the full issue of share options outstanding,
to the extent that they are dilutive.
2023 2022
£'000 £'000
Profit on ordinary activities after taxation 3,122 1,485
2023 2022
Number Number
Average number of shares in issue 12,519,900 12,519,900
Effect of share options - -
Diluted weighted average number of shares 12,519,900 12,519,900
2023 2022
Basic earnings per share 24.9p 11.9p
Diluted earnings per share 24.9p 11.9p
To provide a comparison of earnings per share on underlying performance, the
calculation below sets out basic and diluted earnings per share based on
underlying profits.
Earnings per share on underlying profit 2023 2022
£'000 £'000
Underlying profit before tax (see note 5) 3,218 2,284
Underlying taxation (705) (1,094)
Underlying profit 2,513 1,190
Effective tax rate 21.9% 47.9%
Weighted average number of shares in issue (from above) 12,519,900 12,519,900
Diluted weighted average number of shares (from above) 12,519,900 12,519,900
Basic earnings per share on underlying profit 20.1p 9.5p
Diluted earnings per share on underlying profit 20.1p 9.5p
11. Intangible assets
Computer Brand name Goodwill Total
Software
£'000 £'000 £'000 £'000
Cost: 631 2,823 11,576 15,030
At 1 Apr 2021 and 31 March 2022
Additions 115 - - 115
Transfer from investment property 42 - - 42
At 31 March 2023 788 2,823 11,576 15,187
Accumulated amortisation and impairment:
At 1 Apr 2021 533 785 9,462 10,780
Amortisation 21 - - 21
554 785 9,462 10,801
At 31 March 2022
Amortisation 10 - - 10
At 31 March 2023 564 785 9,462 10,811
Net book value:
At 1 April 2021 31 2,038 2,114 4,183
At 31 March 2022 77 2,038 2,114 4,229
At 31 March 2023 224 2,038 2,114 4,376
Amortisation and impairment charges are recognised in operating expenses in
the income statement. The Momart brand name has a carrying value of
£2,038,000 and is considered to be of future economic value to the Group with
an estimated indefinite useful economic life. It is reviewed annually for
impairment as part of the Art Logistics and Storage review.
Goodwill
Goodwill is allocated to the Group's Cash Generating Units (CGUs) which
principally comprise its business segments. A segment level summary of
goodwill for each cash-generating-unit is shown below:
Art Logistics and Storage Falkland Total
Islands
£'000 £'000 £'000
2,077 37 2,114
Goodwill at 1 April 2021
2,077 37 2,114
Goodwill at 31 March 2022
2,077 37 2,114
Goodwill at 31 March 2023
Impairment
The Group tests material goodwill and indefinite lived intangible assets
annually for impairment or more frequently if there are indications that
goodwill and/or indefinite life assets might be impaired. An impairment test
is a comparison of the carrying value of the assets of a CGU to their
recoverable amounts based on the higher of a value-in-use calculation and fair
value less costs to sell. Goodwill is impaired when the recoverable amount is
less than the carrying value.
11. Intangible assets (continued)
The Art Logistics and Storage CGU is tested for impairment annually because
the only material goodwill and indefinite life assets relate to this CGU. An
impairment review of the Art Logistics and Storage CGU was performed and no
impairment charge was deemed necessary. The recoverable amount for this
assessment was determined using the fair value less costs to sell for the Art
Logistics and Storage CGU. This was underpinned by an independent valuation of
the art storage warehouses in East London, which indicates a fair value well
in excess of the £24.7 million carrying value of the Art Logistics and
Storage CGU.
12. Property, plant and equipment
Group
Right Freehold Long leasehold Ships Vehicles, plant and equipment Total
of use land & buildings land and buildings
assets
£'000 £'000 £'000 £'000 £'000 £'000
Cost:
At 1 April 2021 9,633 29,554 1,009 6,877 9,586 56,659
Additions in year 232 109 53 3 1,168 1,565
Disposals (82) - (3) - (396) (481)
At 31 March 2022* 9,783 29,663 1,059 6,880 10,358 57,743
Additions in year - 113 57 150 1,539 1,859
Additions (non-cash) 561 - - - - 561
Disposals - (54) (49) - (585) (688)
Disposals (non-cash) (120) - - - - (120)
At 31 March 2023 10,224 29,722 1,067 7,030 11,312 59,355
Accumulated depreciation:
At 1 April 2021 3,084 4,403 370 2,790 6,450 17,097
Charge for the year 371 160 243 799 2,342
769
Disposals (75) - (3) - (336) (414)
At 31 March 2022 3,778 4,774 527 3,033 6,913 19,025
Charge for the year 512 24 246 983 2,420
655
Disposals - (43) (49) (570) (662)
Disposals(non-cash) (105) - - - - (105)
At 31 March 2023 4,328 5,243 502 3,279 7,326 20,678
Net book value:
At 1 April 2021 6,549 23,928 1,862 4,087 3,136 39,562
At 31 March 2022* 6,005 24,889 532 3,847 3,445 38,718
At 31 March 2023 5,896 24,479 565 3,751 3,986 38,677
* As detailed in note 1 to the financial statements, comparative numbers for
right of use assets have been restated, resulting in a reduction in net book
value of £0.4 million at 31 March 2022. Certain assets previously disclosed
within long leasehold land and buildings have been reclassified to freehold
land and buildings to more accurately reflect the nature of the assets. As a
result, the cost and accumulated depreciation of freehold land and buildings
at 31 March 2022 increased by 1.9 million and £0.7 million respectively, with
a corresponding reduction in long leasehold land and buildings. There was no
impact on total cost, cumulative depreciation or net book value.
12. Property, plant and equipment (continued)
Right of use assets
Group
Short leasehold Long leasehold Momart Trucks Office Total
lease Pontoon lease Equipment
£'000 £'000 £'000 £'000 £'000
Cost:
At 1 April 2021* 3,136 5,090 1,389 18 9,633
Additions in year 105 126 1 - 232
Disposals - - (82) - (82)
At 31 March 2022* 3,241 5,216 1,308 18 9,783
Additions in year 548 13 - - 561
Disposals (non-cash) - (120) - - (120)
At 31 March 2023 3,789 5,109 1,308 18 10,224
Accumulated depreciation:
At 1 April 2021 1,669 971 429 15 3,084
Charge for the year 303 256 209 1 769
Disposals - - (75) - (75)
At 31 March 2022* 1,972 1,227 563 16 3,778
Charge for the year 60 75 519 1 655
Disposals (non-cash) (40) (65) - - (105)
At 31 March 2023 1,992 1,237 519 17 4,328
Net book value:
At 1 April 2021 1,467 4,119 960 3 6,549
At 31 March 2022* 1,269 3,989 745 2 6,005
At 31 March 2023 1,797 3,872 226 1 5,896
* As detailed in note 1 to the financial statements, comparative numbers for
right of use assets have been restated, resulting in a reduction in net book
value of £0.4 million at 31 March 2022.
No property, plant or equipment was financed by hire purchase loans in the
year to 31 March 2023.
The Company has no tangible fixed assets, other than the investment property
purchased in December 2018, which is included within Investment Property (note
13).
13. Investment properties
Group
Residential and commercial property Freehold land Total
£'000 £'000 £'000
Cost:
At 1 April 2021 7,328 831 8,159
Additions in year 1,238 - 1,238
At 31 March 2022 8,566 831 9,397
Additions in year 10 - 10
Transfer to intangibles (42) - (42)
At 31 March 2023 8,534 831 9,365
Accumulated depreciation:
At 1 April 2021 1,036 - 1,036
Charge for the year 197 - 197
At 31 March 2022 1,233 - 1,233
Charge for the year 210 - 210
At 31 March 2023 1,443 - 1,443
Net book value:
At 1 April 2021 6,292 831 7,123
At 31 March 2022 7,333 831 8,164
At 31 March 2023 7,091 831 7,922
The investment properties, held at cost, comprise land, plus residential and
commercial property held for rental in the Falkland Islands.
Estimated Fair Value
Group
2023 2022
£'000 £'000
Estimated fair value:
Freehold land 2,177 2,177
Properties available for rent 10,420 10,139
Properties under construction 43 173
At 31 March 12,640 12,489
Uplift on net book value:
Freehold land 1,346 1,346
Properties available for rent 3,286 2,979
At 31 March 4,632 4,325
Number of rental properties
Available for rent 85 83
Under construction - 2
13. Investment properties (continued)
A level 3 valuation technique has been applied, using a market approach to
value these properties; the properties have been valued based on their
expected market value by the directors.
Assets under construction
At 31 March 2023, improvements to the FIC jetty in Stanley were included in
investment property assets under construction (2022: 2 housing units) with a
total cost to date of £43,000 (2022: £173,000).
Company Commercial property
£'000
Cost:
31 March 2021, 31 March 2022 and 1 April 2023 19,642
Accumulated depreciation:
At 31 March 2021 478
Charge for the year 208
At 31 March 2022 686
Charge for the year 205
At 31 March 2023 891
Net book value:
At 1 April 2021 19,164
At 31 March 2022 18,956
At 31 March 2023 18,751
The investment property in the Company consists of the five warehouses leased
to Momart, the Group's art handling subsidiary, which were purchased in
December 2018.
The directors have reviewed the market value of the Leyton warehouses and have
used valuation reports prepared by Colliers International Property Consultants
Limited. The directors consider that the market value of the property is
significantly higher than book value. Further detail is given in note 11.
14. Investment in subsidiaries
Country of Class of shares held Ownership at Ownership at
incorporation 31 March 2022 31 March 2021
The Falkland Islands Company Limited ((1)) UK Ordinary shares of £1 100% 100%
Preference shares of £10 100% 100%
The Falkland Islands Trading Company Limited ((1)) UK Ordinary shares of £1 100% 100%
Falkland Islands Shipping Limited ((2) (6)) Falkland Islands Ordinary shares of £1 100% 100%
Erebus Limited((2) (6) (7)) Falkland Islands Ordinary shares of £1 100% 100%
Preference shares of £1 100% 100%
South Atlantic Support Services Limited((3) (6) (7)) Falkland Islands Ordinary shares of £1 100% 100%
Falkland Islands Ordinary shares of £1 100% 100%
Paget Limited((2) (6) (7))
The Portsmouth Harbour Ferry Company Limited((4)) UK Ordinary shares of £1 100% 100%
Portsea Harbour Company Limited((4) (6)) UK Ordinary shares of £1 100% 100%
Clarence Marine Engineering Limited((4) (6)) UK Ordinary shares of £1 100% 100%
Gosport Ferry Limited((4) (6)) UK Ordinary shares of £1 100% 100%
Portsmouth Harbour Waterbus Company Limited((4) (6) (7)) UK Ordinary shares of £1 100% 100%
Momart International Limited((5) (7)) UK Ordinary shares of £1 100% 100%
Momart Limited((5) (6)) UK Ordinary shares of £1 100% 100%
Dadart Limited((5) (6) (7)) UK Ordinary shares of £1 100% 100%
((1)) The registered office for these companies is Kenburgh Court, 133-137
South Street, Bishop's Stortford, Hertfordshire CM23 3HX.
((2)) The registered office for these companies is 5 Crozier Place, Stanley,
Falkland Islands FIQQ 1ZZ.
((3)) South Atlantic Support Services Limited's registered office is 56 John
Street, Stanley, Falkland Islands FIQQ 1ZZ
((4)) The registered office for these companies is South Street, Gosport,
Hampshire, PO12 1EP.
((5)) The registered office for these companies is Exchange Tower, 6(th)
Floor, 2 Harbour Exchange Square, London E14 9GE.
((6)) These investments are not held by the Company but are indirect
investments held through a subsidiary of the Company.
((7)) These investments have all been dormant for the current and prior year.
14. Investment in subsidiaries (continued)
Company
2023 2022
£'000 £'000
At 1 April 26,762 26,737
Share based payments charge capitalised into subsidiaries (5) 25
At 31 March* 26,757 26,762
* As detailed in note 1 to the financial statements, the carrying value of
investments have been restated, resulting in an increase of £2.7 million at
31 March 2022.
The amounts disclosed are net of a provision for impairment of £18 million
(2022: £18 million).
15. Investment in Joint Ventures
The Group has one joint venture (South Atlantic Construction Company Limited,
"SAtCO"), which was set up in June 2012 in the Falkland Islands, with Trant
Construction to bid for the larger infrastructure contracts which were
expected to be generated by oil activity. Both Trant Construction and the FIC
contributed £50,000 of ordinary share capital. SAtCO is registered and
operates in the Falkland Islands. The net assets of SAtCO are shown below:
Joint Venture's balance sheet 2023 2022
£'000 £'000
Current assets 519 519
Liabilities due in less than one year (1) (1)
Net assets of SAtCO 518 518
Group share of net assets 259 259
There were no recognised gains or losses for the years ended 31 March 2023
(2022: none).
The current assets balances above include £16,000 of cash (2022: £16,000),
£5,000 of other debtors (2022: £5,000) and £498,000 (2022: £498,000) of
loans due from SAtCO's parent companies.
SAtCO had no contingent liabilities or capital commitments as at 31 March 2023
or 31 March 2022 and the Group had no contingent liabilities or commitments in
respect of its joint venture at 31 March 2023 or 31 March 2022.
SATCO's registered office is 56 John Street, Stanley, Falkland Islands FIQQ
1ZZ
16. Finance leases receivable
As lessor, FIC has sold assets to customers on finance lease agreements. The
present value of the lease payments, together with any unguaranteed residual
value, is recognised as a receivable, net of allowances for expected bad debt
losses.
The difference between the gross receivable and the present value of future
lease payments, is recognised as unearned lease income. Lease income is
recognised in revenue over the term of the lease using the sum of digits
method so as to give a constant rate of return on the net investment in the
leases. Lease receivables are reviewed regularly to identify any impairment.
Lease receivables arise on the sale of vehicles and consumer goods, such as
furniture and electrical items, by FIC. No contingent rents have been
recognised as income in the period. No residual values accrue to the benefit
of the lessor.
16. Finance leases receivable (continued)
Group
2023 2022
£'000 £'000
Non-Current: Lease debtors due after more than one year 681 725
Current: Lease debtors due within one year 397 511
Total lease debtors 1,078 1,236
The difference between the gross investment in the finance lease receivables
and the present value of future lease payments due represents unearned lease
income of £375,000 (2022: £310,000). The cost of assets acquired for the
purpose of renting out under hire purchase agreements by the Group during the
year amounted to £629,000 (2022: £960,000).
The total cash received during the year in respect of hire purchase agreements
was £923,000 (2022: £985,000).
Group
2023 2022
£'000 £'000
Gross investment in finance lease receivables 1,484 1,571
Unearned lease income (375) (310)
Bad debt provision against hire purchase leases (31) (25)
Present value of future lease receipts 1,078 1,236
17. Deferred tax assets and liabilities
Recognised deferred tax assets and (liabilities) Group
2023 2022
£'000 £'000
Property, plant & equipment (3,874) (3,537)
Intangible assets (509) (509)
Inventories (unrealised intragroup profits) 90 81
Other financial liabilities 54 104
Derivative financial instruments (44) (27)
Share-based payments 68 108
Total net deferred tax liabilities (4,215) (3,780)
Deferred tax asset arising on the defined benefit pension liabilities 482 666
Net tax liabilities (3,733) (3,114)
The deferred tax asset on the defined benefit pension scheme (see note 23)
arises under the Falkland Islands tax regime and has been presented on the
face of the consolidated balance sheet as a non-current asset as it is
expected to be realised over a relatively long period of time. All other
deferred tax assets are shown net against the non-current deferred tax
liability shown in the balance sheet.
Company
2023 2022
£'000 £'000
Derivative financial liabilities (44) (27)
Other temporary differences (41) 15
Net tax asset / (liability) (85) (12)
17. Deferred tax assets and liabilities (continued)
Movement in deferred tax assets / (liabilities) in the year:
Group
1 April 2022 Recognised in income Recognised in equity 31 March 2023
£'000 £'000 £'000 £'000
Property, plant & equipment (3,537) (337) - (3,874)
Intangible assets (509) - (509)
Inventories (unrealised intragroup profits) 81 9 - 90
Other financial liabilities 104 (47) (3) 54
Derivative financial instruments (27) (61) 44 (44)
Share-based payments 108 - (40) 68
Pension 666 (8) (176) 482
Deferred tax movements (3,114) (444) (175) (3,733)
Unrecognised deferred tax assets
Deferred tax assets of £141,000 (2022: £44,000) in respect of capital losses
have not been recognised as it is not considered probable that there will be
suitable chargeable gains in the foreseeable future from which the underlying
capital losses will reverse.
Movement in deferred tax assets / (liabilities) in the year: Company
1 April 2022 Recognised in income Recognised in equity 31 March 2023
£'000 £'000 £'000 £'000
Derivative financial liabilities instruments (27) (61) 44 (44)
Other temporary differences 15 (16) (40) (41)
Deferred tax asset movements (12) (77) (4) (85)
Movement in deferred tax assets / (liabilities) in the prior year:
Group
1 April 2021 Recognised in income Recognised in equity 31 March 2022
£'000 £'000 £'000 £'000
Property, plant & equipment (2,938) (599) - (3,537)
Intangible assets (387) (122) - (509)
Inventories 62 19 - 81
Other financial liabilities 66 31 7 104
Derivative financial instruments 44 (31) (40) (27)
Share-based payments 40 17 51 108
Pension 739 (11) (62) 666
Deferred tax movements (2,374) (696) (44) (3,114)
Movement in deferred tax asset in the prior year: Company
1 April 2021 Recognised in income Recognised in equity 31 March 2022
£'000 £'000 £'000 £'000
Derivative financial instruments 44 (31) (40) (27)
Other temporary differences - 15 - 15
Deferred tax asset movements 44 (16) (40) (12)
17. Deferred tax assets and liabilities (continued)
An increase in the UK corporation rate from 19% to 25% (effective 1 April
2023) was substantively enacted on 24 May 2021. It has been assumed that all
material UK deferred tax elements will reverse in 2023 or later and hence all
elements are calculated at 25%. Deferred tax assets and liabilities relating
to the Falkland Islands have been recognised at a rate of 26%.
18. Inventories
Group
2023 2022
£'000 £'000
Work in progress 225 1,033
Goods in transit 605 284
Goods held for resale and raw materials 6,046 5,423
Total Inventories 6,876 6,740
The Company has no inventories.
19. Trade and other receivables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Non-Current
Rental deposits - 44 - -
Amount owed by subsidiary undertakings - - 10,257 10,057
Total trade and other receivables - 44 10,257 10,057
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Current
Trade and other receivables 7,203 5,362 - -
Rental deposits 116 88 - -
Prepayments 1,533 1,515 11 45
Accrued income 433 982 - -
Contract asset 904 - - -
Total trade and other receivables 10,189 7,947 11 45
Amounts owed by subsidiary undertakings to the Company are not secured and
interest free with no fixed repayment date.
The accrued income relates to contracts where the work has been completed but
had not been billed at the balance sheet date. No allowance for expected
credit losses was recognised in respect of accrued income as the impact was
assessed as being immaterial. The only significant changes in the accrued
income balance during the year related to the recognition of revenue for work
performed and the transfer of billed amounts to trade receivables.
20. Cash and cash equivalents
Group 2022 Cash Other non-cash 2023
£'000 Flows Changes £'000
Interest
Cash and cash equivalents 9,572 3,254 - (26) 12,800
Bank loans (14,183) 1,352 (424) - (13,255)
Net debt (4,611) 4,606 (424) (26) (455)
Interest rate swap 644 - 915 1,559
Lease liabilities* (6,536) 922 (304) (561) (6,479)
Derivatives and lease liabilities (5,892) 922 (304) 354 (4,920)
Net debt after derivatives and lease liabilities at 31 March (10,503) 5,528 328 (5,375)
(728)
Movement in financial liabilities* above
Financing liabilities** (20,075) 2,274 (728) 354 (18,175)
.
Company 2022 Cash Other non-cash 2023
£'000 Flows Interest Changes £'000
Cash and cash equivalents 4,376 (1,069) - 3,307
Bank loans (12,668) 890 (368) - (12,146)
Net debt (8,292) (179) (368) - (8,839)
Interest rate swap 644 - - 915 1,559
Net debt after derivatives at 31 March (7,648) (179) 915 (7,280)
(368)
Movement in financial liabilities above
Financing liabilities** (12,024) 890 (368) 915 (10,587)
* As detailed in note 1 to the financial statements, lease liabilities have
been restated, resulting in a reduction of £0.6 million at 31 March 2022.
**The total for financing liabilities was not presented in the 2022 annual
report and accounts as required by IAS 7 and the derivative instrument was
also omitted from the disclosure. This has been corrected by disclosing the
total for financing liabilities and including the opening balance of the
derivative of £644,000, being the interest rate swap as at 31 March 2022.
Other non-cash changes comprise, foreign exchange movements, fair value
movements and new lease liabilities.
21. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the
interest-bearing loans and borrowings owed by the Group, which are stated at
amortised cost. Information on the maturity of interest-bearing loans and
lease liabilities and exposure to interest rate and foreign currency risk is
disclosed in note 26.
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Non-current liabilities
Secured bank loans 12,316 13,235 11,617 12,139
Lease liabilities* 5,898 5,948 - -
Total non-current interest-bearing loans and lease liabilities 18,214 19,183 11,617 12,139
Current liabilities
Secured bank loans 939 948 529 529
Lease liabilities* 581 588 - -
Total current interest-bearing loans and lease liabilities 1,520 1,536 529 529
Total liabilities
Secured bank loans 13,255 14,183 12,146 12,668
Lease liabilities* 6,479 6,536 - -
Total interest-bearing loans and lease liabilities 19,734 20,719 12,146 12,668
Lease liabilities
Future minimum lease Interest Present value of minimum lease payments
payments
2023 2022 2023 2022 2023 2022
£'000 £'000 £'000 £'000 £'000 £'000
Less than one year 868 874 (287) (287) 581 587
Between one and two years 779 709 (269) (269) 510 440
Between two and five years 1,689 1,616 (725) (733) 964 883
More than five years 9,053 9,564 (4,629) (4,938) 4,424 4,626
Total* 12,389 12,763 (5,910) (6,227) 6,479 6,536
* As detailed in note 1 to the financial statements, lease liabilities have
been restated, resulting in a reduction of £0.6 million at 31 March 2022.
22. Trade and other payables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Current
Trade payables 6,322 4,111 6 29
Contract liability - 254 - -
Amounts owed to subsidiary undertakings - - 5,269 5,085
Loan from joint venture 249 249 - -
Other creditors, including taxation and social security 2,835 2,080 116 120
Accruals 3,950 2,962 548 615
Deferred income 362 314 - -
Total trade and other payables 13,718 9,970 5,939 5,849
Amounts owed to subsidiary undertakings by the company are not secured,
interest free and repayable on demand.
23. Employee benefits: pension plans
Defined contribution schemes
The Group operates defined contribution schemes at PHFC and Momart and current
FIC employees are enrolled in the Falkland Islands Pension Scheme ("FIPS").
The assets of all these schemes are held separately from those of the Group in
independently administered funds.
The pension cost charge for the year represents contributions payable by the
Group to the schemes and amounted to £535,000 (2022: £505,000). The Group
anticipates paying contributions amounting to £567,000 during the year ending
31 March 2024. There were outstanding contributions of £44,000 (2022:
£11,000) due to pension schemes at 31 March 2023.
The Falkland Islands Company Limited Scheme
FIC operates a defined benefit pension scheme for certain former employees.
This scheme was closed to new members in 1988 and to further accrual on 31
March 2007. The scheme has no assets and payments to pensioners are made out
of operating cash flows. The expected contributions for the year ended 31
March 2024 are £102,010. During the year ended 31 March 2023, 10 pensioners
(2022: 11) received benefits from this scheme, and there are three deferred
members at 31 March 2023 (2022: three). Benefits are payable on retirement at
the normal retirement age. The weighted average duration of the expected
benefit payments from the Scheme is around 12 years (2022: 14 years).
An actuarial report for IAS 19 purposes as at 31 March 2023 was prepared by a
qualified independent actuary, Lane Clark and Peacock LLP. The major
assumptions used in the valuation were:
2023 2022
Rate of increase in pensions in payment and deferred pensions 2.5% 2.7%
Discount rate applied to scheme liabilities 4.8% 2.8%
Inflation assumption 3.9%
Average longevity at age 65 for male current and deferred pensioners 22.0 22.0
(years) at accounting date
Average longevity at age 65 for male current and deferred pensioners 24.4 23.4
(years) 20 years after accounting date
The assumptions used by the actuary are chosen from a range of possible
actuarial assumptions which, due to the timescale covered, may not necessarily
be borne out in practice. Assumptions relating to life expectancy have been
based on UK mortality data on the basis that this is the best available data
for the Falkland Islands.
Sensitivity Analysis
The calculation of the defined benefit liability is sensitive to the
assumptions set out above. The following table summarises how the impact of
the defined benefit liability at 31 March 2023 would have increased /
(decreased) as a result of a change in the respective assumptions by 1.0%.
Effect on Obligation
2023
-1% pa +1% pa
£'000 £'000
Discount rate 240 (200)
Inflation assumption (10) 10
-1 year +1 year
£'000 £'000
Life expectancy (80) 80
These sensitivities have been calculated to show the movement in the defined
benefit obligation in isolation, and assume no other changes in market
conditions at the accounting date.
23. Employee benefits: pension plans (continued)
Scheme liabilities
The present values of the scheme's liabilities, which are derived from cash
flow projections over long periods and thus inherently uncertain, were:
Value at
2019 2020 2021 2022 2023
£'000 £'000 £'000 £'000 £'000
Present value of scheme liabilities (2,772) (2,604) (2,842) (2,562) (1,978)
Related deferred tax assets 721 677 677 666 482
Net pension liability (2,051) (1,927) (2,165) (1,896) (1,496)
Movement in deficit during the year: 2023 2022
£'000 £'000
(2,562) (2,842)
Deficit in scheme at beginning of the year
Pensions paid 101 99
Other finance cost (70) (56)
Re-measurement of the defined benefit pension liability 553 237
Deficit in scheme at the end of the year (1,978) (2,562)
Analysis of amounts included in other finance costs: 2023 2022
£'000 £'000
Interest on pension scheme liabilities 70 56
Analysis of amounts recognised in statement of comprehensive income: 2023 2022
£'000 £'000
Experience gains arising on scheme liabilities (1) (43)
Changes in assumptions underlying the present value of scheme liabilities 554 280
Re-measurement of the defined benefit pension liability 553 237
24. Employee benefits: share based payments
The total number of options outstanding at 31 March 2023 is 310,654 comprising
(i) 3,591 nil cost options (2022: 3,591), (ii) 302,063 options (2022: 431,243)
granted under the Long-Term Incentive Plan and (iii) 5,000 (2022: 5,000) share
options granted with an exercise price equal to the market price on the date
of grant.
(i) Nil cost options granted to John Foster:
Share price at grant date Fair value per share Total fair value Earliest Exercise Latest Exercise
Date of Issue Number
pence pence £ Date date
17 Jun 19 17 Jun 22
3,591 316.0 301.0 10,809 17 Jun 23
Total 3,591 10,809
24. Employee benefits: share based payments (continued)
Number of options Number of options
Reconciliation of nil cost options:
2023 2022
Outstanding at the beginning of the year 3,591 12,864
Options exercised during the year - (9,273)
Outstanding at the year end 3,591 3,591
(ii) Incentive Plan grants at an exercise price of ten pence to directors of
subsidiaries and executives:
255,304 Long-term Incentive Plan grants were issued on 3 December 2021 at an
exercise price of ten pence to directors of subsidiaries and executives, and
expire in five years on 3 December 2026. During the year, 52,953 of these
options were forfeited (2022: 34,535) and 167,816 of these options remain
outstanding at 31 March 2023. None of these grants are exercisable at 31 March
2023.
133,052 Long-term Incentive Plan grants were issued on 14 July 2020 at an
exercise price of ten pence to directors of subsidiaries and executives, and
expire in five years on 14 July 2025. During the year, 51,434 of these
options were forfeited (2022: nil) and 71,618 of these options remain
outstanding at 31 March 2023. None of these grants are exercisable at 31 March
2023.
135,535 Long-term Incentive Plan grants were issued on 4 July 2019 at an
exercise price of ten pence to directors of subsidiaries and executives, and
expire in five years on 4 July 2024. During the year, 24,793 of these options
were forfeited (2022: nil) and 62,629 options remain outstanding at 31 March
2023. None of these grants are exercisable at 31 March 2023.
There are various performance conditions attached to the Long-term Incentive
Plan grants. All have a primary performance condition of the Group share price
exceeding a target threshold at the vesting date, and secondary financial
performance conditions specific to the relevant operating segment. All the
options have a three-year vesting period.
Share price at grant date Fair value per share Total fair value Earliest Exercise Latest Exercise
Date of Issue Number Exercise Price
pence Pence pence £ Date date
4 Jul 19 62,629 10.0 314.0 96.8 60,616 4 Jul 22 3 Jul 24
14 Jul 20 71,618 10.0 315.0 75.0 53,714 15 Jul 23 13 Jul 25
3 Dec 21 167,816 10.0 215.0 88.0 147,678 3 Dec 24 2 Dec 26
Total 302,063 262,008
Reconciliation of LTIPs: Number of options Number of options
2023 2022
Outstanding at the beginning of the year 431,243 210,474
Options granted during the year - 255,304
Options forfeited during the year (129,180) (34,535)
Outstanding at the year end 302,063 431,243
- -
Vested options exercisable at the year end
Weighted average life of outstanding options (years) 3.4 4.4
24. Employee benefits: share based payments (continued)
(iii) Share options with an exercise price equal to the market price on the
date of grant
Share price at grant date Fair value per share Total fair value Earliest Exercise Latest Exercise
Date of Issue Number Exercise Price
pence Pence pence £ Date date
19 Jan 15 5,000 272.5 272.5 63.0 3,150 19 Jan 18 18 Jan 25
Total 5,000 3,150
The exercise price of outstanding options at 31 March 2023 is £2.725.
Reconciliation of options with an exercise price equal to the market price on
the date of grant, including the number and weighted average exercise price:
Weighted average exercise price (£) Number of options Weighted average exercise price (£) Number of options
2023 2023 2022 2022
Outstanding at the beginning of the year 2.73 5,000 2.68 58,152
Lapsed during the year - - 2.68 (53,152)
Outstanding at the year end 2.73 5,000 2.73 5,000
Vested options exercisable at the year end 2.73 5,000 2.73 5,000
Weighted average life of outstanding options (years) 1.8 2.8
The fair values of the options are estimated at the date of grant using
appropriate option pricing models and are charged to the profit and loss
account over the vesting period of the options. All options, other than
certain nil cost options, are granted with the condition that the employee
remains in employment for three years.
All share options are equity settled. Share options issued without share price
conditions attached have been valued using the Black-Scholes model. Share
price options issued with share price conditions attached have been valued
using a Monte Carlo simulation model making explicit allowance for share price
targets. Inputs into the valuation models include the estimated time to
maturity, the risk-free rate, expected volatility, and dividend yield.
During the year ending 31 March 2023 no nil cost options were exercised over
ordinary shares (2022: 9,273 at a gain of £23,183).
2023 2022
£'000 £'000
Total share-based payment expense recognised in the year 41 45
25. Capital and reserves
Share capital Ordinary Shares
2023 2022
In issue at the start of the year 12,519,900 12,514,985
Share capital issued during the year - 4,915
In issue at the end of the year 12,519,900 12,519,900
2023 2022
£'000 £'000
Allotted, called up and fully paid Ordinary shares of 10p each 1,251 1,251
By special resolution at an Annual General Meeting on 9 September 2010 the
Company adopted new articles of association, principally to take account of
the various changes in company law brought in by the Companies Act 2006. As a
consequence, the Company no longer has an authorised share capital. The
holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the
Company.
During the year no shares (2022: 4,915) were issued following the exercise of
share options.
Other reserves
The other reserves in the Group of £703,000 at 31 March 2023 comprise
£5,389,000 of merger relief which arose on the 1998 Scheme of Arrangement,
when the Company issued 1 share for every 300 shares that shareholders had
previously held in Anglo United plc. Immediately following this Scheme of
Arrangement, the Company acquired the Falkland Islands' businesses for £8.0
million and the £4,686,000 of goodwill on this acquisition was written off
against the merger relief.
Share premium
Hedging reserve
Dividends
The following dividends were recognised and paid in the period:
2023 2022
£'000 £'000
Interim 2022: 1.0 pence per qualifying ordinary share - 125
Final 2022: 2.0 pence per qualifying ordinary share 251 -
Interim 2023: 1.2 pence per qualifying ordinary share 150 -
Total dividends recognised in the period 401 125
26. Financial instruments
(i) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables is estimated as the present
value of future cash flows, discounted at the market rate of interest at the
balance sheet date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value
of future cash flows, discounted at the market rate of interest at the balance
sheet date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying
amount where the cash is repayable on demand. Where it is not repayable on
demand then the fair value is estimated at the present value of future cash
flows, discounted at the market rate of interest at the balance sheet date.
Interest-bearing borrowings
The fair value of interest-bearing borrowings, which after initial recognition
is determined for disclosure purposes only, is calculated based on the present
value of future principal and interest cash flows, discounted at the market
rate of interest at the balance sheet date.
Financial Instruments categories and fair values
The fair values of financial assets and financial liabilities are not
materially different to the carrying values shown in the consolidated balance
sheet and Company balance sheet.
The following table shows the carrying value, which management consider to be
materially equal to fair value for each category of financial instrument:
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Cash and cash equivalents 12,800 9,572 3,307 4,376
Finance lease debtors 1,078 1,236 - -
Interest rate swap asset 1,559 644 1,559 644
Trade and other receivables 7,203 5,362 - -
Rental deposits 116 132 - -
Total assets exposed to credit risk 22,756 16,946 4,866 5,020
Interest rate swap liability - - - -
Total trade and other payables (12,508) (9,119) (5,939) (5,849)
Interest-bearing borrowings at amortised cost (19,734) (21,249) (12,146) (12,668)
The interest rate swaps have been valued using a level 2 methodology.
(ii) Credit Risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group's receivables from
customers.
Group
The Group's credit risk is primarily attributable to its trade receivables.
The maximum credit exposure of the Group comprises the amounts presented in
the balance sheet, which are stated net of provisions for expected credit
losses. Expected credit loss provisions are based on previous experience and
other evidence, including forward-
26. Financial instruments (continued)
looking macroeconomic information, indicative of the recoverability of future
cash flows. There have been no significant changes in the estimation
techniques or significant assumptions made during the reporting period.
Management has credit policies in place to manage risk on an on-going basis.
These include the use of customer specific credit limits.
Company
The majority of the Company's receivables are with subsidiaries. The Company
does not consider these counter-parties to be a significant credit risk.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit
exposure. Therefore, the maximum exposure to credit risk at the balance sheet
date was £22,085,000 (2022: £16,946,000) being the total trade receivables,
finance lease debtors, interest swap, rental deposits and cash and cash
equivalents in the balance sheet. The credit risk on cash balances and the
interest rate swap is limited because the counterparties are banks with high
credit ratings assigned by international credit-rating agencies.
The maximum exposure to credit risk for trade receivables at the balance sheet
date by geographic region was:
Group
2023 2022
£'000 £'000
Falkland Islands 3,167 1,773
Europe 617 775
North America 526 254
United Kingdom 2,492 2,365
Other 401 195
Total trade receivables 7,203 5,362
The Company has no trade debtors.
Credit quality of financial assets and expected credit losses
Group Gross Impairment Net Gross Impairment Net
2023 2023 2023 2022 2022 2022
£'000 £'000 £'000 £'000 £'000 £'000
Not past due 5,722 - 5,747 3,736 - 3,736
Past due 0-30 days 1,013 (7) 1,006 1,020 (2) 1,018
Past due 31-120 days 204 (10) 194 491 (58) 433
More than 120 days 429 (148) 281 328 (153) 175
Total trade receivables 7,368 (165) 7,203 5,575 (213) 5,362
Finance lease debtors 1,078 (31) 1,047 1,261 (25) 1,236
The amount of finance lease receivable that is past due is immaterial and
secured on asset financed.
26. Financial instruments (continued)
The movement in the allowances for impairment in respect of trade receivables
and finance lease receivables during the year was:
Group
2023 2022
£'000 £'000
Balance at 1 April 238 127
Impairment loss recognised 27 114
Utilisation of provision (debts written off) (69) (3)
Balance at 31 March 196 238
Provided against finance lease receivables 31 25
Provided against trade and other receivables 165 213
Balance at 31 March 196 238
The allowance account for trade receivables is used to record impairment
losses unless the Group is satisfied that no recovery of the amount owing is
possible. At that point, the amounts considered irrecoverable are written off
against the trade receivables directly.
No further analysis has been provided for cash and cash equivalents, trade
receivables from Group companies, other receivables and other financial
assets, as there is limited exposure to credit risk and expected credit losses
are assessed as immaterial.
(iii) Liquidity risk
Financial risk management
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. At the beginning of the year the Group
had outstanding bank loans of £14.2 million (2022 £20.1 million). All
payments due during the year with respect to these agreements were met as they
fell due.
At the start of the year, the Company had one bank loan of £12.7 million
(2022 £13.2 million). All payments due during the year with respect to these
agreements were met as they fell due.
The Group manages its cash balances centrally at head office and prepares
rolling cash flow forecasts to ensure availability of funds.
Liquidity risk - Group
The following are the contractual maturities of financial liabilities,
including estimated interest:
Contractual cash flows
2023 Carrying amount Total 1 year or less 1 to 2 years 2 to 5 years 5 years and over
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Secured bank loans 13,255 15,274 1,348 1,404 3,047 9,475
Lease liabilities 6,479 12,977 839 779 1,688 9,671
Trade payables 6,322 6,322 6,322 - - -
Other creditors 1,696 1,696 1,696 - - -
Loan from Joint Venture 249 249 249 - - -
Accruals 3,950 3,950 3,950 - - -
Total financial liabilities 31,951 40,468 14,404 2,183 4,735 19,146
26. Financial instruments (continued)
Contractual cash flows
2022 Carrying amount Total 1 year or less 1 to 2 years 2 to 5 years 5 years and over
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Secured bank loans 14,183 16,410 1,346 1,332 3,486 10,246
Lease liabilities 7,066 13,293 874 709 1,616 10,094
Trade payables 4,111 4,111 4,111 - - -
Other creditors 1,797 1,797 1,797 - - -
Loan from joint venture 249 249 249 - - -
Accruals 2,962 2,962 2,962 - - -
Total financial liabilities 30,368 38,822 11,339 2,041 5,102 20,340
Liquidity risk - Company
The following are the contractual maturities of financial liabilities,
including estimated interest payments and excluding the effects of netting
agreements:
Contractual cash flows
2023 Carrying amount Total 1 year or less 1 to 2 years 2 to 5 years 5 years and over
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Secured bank loans 12,146 14,098 891 947 2,785 9,475
Trade payables 6 6 6 - - -
Amounts owed to subsidiary undertakings 5,269 5,269 5,269 - - -
Other creditors 89 89 89 - - -
Accruals 548 548 548 - - -
Total financial liabilities 18,058 20,010 6,803 947 2,785 9,475
Contractual cash flows
2022 Carrying amount Total 1 year or less 1 to 2 years 2 to 5 years 5 years and over
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Secured bank loans 12,668 14,825 893 879 2,807 10,246
Amounts owed to subsidiary undertakings 29 29 29 - - -
Interest rate swap liability 5,085 5,085 5,085 - - -
Other creditors 89 89 89 - - -
Accruals 615 615 615 - - -
Total financial liabilities 18,486 20,643 6,711 879 2,807 10,246
26. Financial instruments (continued)
(iv) Market Risk
Financial risk management
Market risk is the risk that changes in market prices, such as foreign
exchange rates, interest rates and equity prices will affect the Group's
income or the value of its holdings of financial instruments.
Market risk - Foreign currency risk
The Group has exposure to foreign currency risk arising from trade and other
payables which are denominated in foreign currencies. The Group is not,
however, exposed to any significant transactional foreign currency risk. The
Group's exposure to foreign currency risk is as follows and is based on
carrying amounts for monetary financial instruments.
Group
2023 EUR USD Other Total Balance sheet exposure GBP Total
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 107 219 15 341 12,459 12,800
Trade payables and other payables (485) (645) (661) (1,791) (11,927) (13,718)
Balance sheet exposure (378) (426) (646) (1,450) 532 (918)
2022 EUR USD Other Total Balance sheet exposure GBP Total
£'000 £'000 £'000 £'000 £'000 £'000
Cash and cash equivalents 126 117 40 283 9,289 9,572
Trade payables and other payables (635) (479) (312) (1,426) (8,544) (9,970)
Balance sheet exposure (509) (362) (272) (1,143) 745 (398)
The Company has no exposure to foreign currency risk.
Sensitivity analysis
Group
A 10% weakening of the following currencies against pound sterling at 31 March
2023 would have increased/(decreased) equity and profit or loss by the amounts
shown below. This calculation assumes that the change occurred at the balance
sheet date and had been applied to risk exposures existing at that date. This
analysis assumes that all other variables, in particular other exchange rates
and interest rates remain constant and is performed on the same basis for year
ended 31 March 2022.
Equity Profit or Loss
2023 2022 2023 2022
£'000 £'000 £'000 £'000
EUR 38 51 38 51
USD 43 36 43 36
A 10% strengthening of the above currencies against pound sterling at 31 March
2023 would have the equal but opposite effect on the above currencies to the
amounts shown above, on the basis that all other variables remain constant.
26. Financial instruments (continued)
Market risk - interest rate risk
At the balance sheet date, the interest rate profile for the Group's
interest-bearing financial instruments was:
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Fixed rate financial instruments
Leases receivable 1,078 1,236 - -
Bank loans (407) (508) - -
Lease liabilities (6,479) (7,066) - -
Total fixed rate financial instruments (5,808) (6,338) - -
Variable rate financial instruments
Effect of Interest rate swap 1,559 - - -
Bank loans (12,848) (13,675) (12,146) (12,668)
Total variable rate financial instruments (11,289) (13,675) (12,146) (12,668)
At 31 March 2023, the Group had four bank loans:
(i) £12.1 million (2022: £12.7 million) ten-year loan, which
was drawn down on 28 June 2019, with interest charged at the compounded daily
SONIA rate plus 1.8693%;
(ii) £0.6 million (2022: £0.8 million) repayable over ten
years until May 2025, secured against the newest vessel in PHFC, with interest
charged at 2.6% above the bank of England base rate;
(iii) £0.1 million (2022: £0.2 million) repayable over ten
years until May 2025, secured against freehold property held in PHFC, with
interest charged at 1.75% above the Bank of England base rate;
(iv) £0.4 million (2022: £0.5 million) drawn down by Momart,
interest has been fixed on this loan at 2.73% for the full ten years until
December 2026.
The interest payable on the £12.1 million ten-year loan has been hedged by
one interest swap, taken out on 30 December 2021 with an initial notional
value of £12.625 million, with interest payable at the difference between
1.1766% and the compounded daily SONIA rate plus 0.1193%. This interest rate
swap notional value decreases at £125,000 per quarter over five years until
June 2024, and then at £150,000 per quarter for a further five years until
June 2029 when the outstanding bullet payment of £8,525,000 is likely to be
refinanced. The notional value of the swap at 31 March 2023 is £12.0 million
(2022: £12.5 million).
Lease liabilities
At 31 March 2023, the Group had the following lease liabilities:
(i) £5.1 million lease liabilities payable to Gosport Borough
Council; £4.5 million for the Gosport pontoon and £0.6 million for the
ground rent on the pontoon. Both of these leases run until June 2061 and
finance charges accrue on these liabilities at a weighted average rate of
4.51%.
(ii) £1.4 million of property rental leases, including two
warehouses rented by Momart and the Momart and Bishops Stortford head offices,
which run for between 3 to 6 years as at 31 March 2023. The weighted average
interest rate of these rental liabilities is 3.25%.
(iii) £0.5 million of lease liabilities taken out to finance
trucks by hire purchase leases at Momart. The weighted average interest rate
of these truck liabilities is 3.08%.
The total blended average interest rate on the Group's lease liabilities is
4.2 % per annum.
26. Financial instruments (continued)
Interest rate sensitivity analysis
An increase of 100 basis points in interest rates at the balance sheet date
would have increased / (decreased) equity and profit or loss by the amounts
shown below. This calculation assumes that the change occurred at the balance
sheet date and has been applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular foreign currency
rates, remain constant and considers the effect of financial instruments with
variable interest rates and financial instruments at fair value through profit
or loss or available-for-sale with fixed interest rates. The analysis is
performed on the same basis for 31 March 2022.
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Equity
Interest rate swap liability 121 127 121 127
Variable rate financial liabilities (128) (137) (121) (127)
Profit or Loss
Interest rate swap liability 121 127 121 127
Variable rate financial liabilities (128) (137) (121) (127)
(v) Capital Management
The Group's objectives when managing capital, which comprises equity and
reserves at 31 March 2023 of £43,806,000 (2022: £40,657,000) are to
safeguard its ability to continue as a going concern, so that it can continue
to provide returns to shareholders and benefits to our other stakeholders.
27. Operating leases
Leases as lessor
The Group leases out its investment properties, which consist of 75 houses and
flats and ten mobile homes in the Falkland Islands, these are leased to staff,
fishing agency representatives and other short-term visitors to the Islands.
These lease agreements generally have an initial notice period of six months,
and beyond the six months initial tenancy, one month's notice can be given by
either party, therefore future minimum lease payments under non-cancellable
leases receivable are not material.
The Company had no operating lease commitments. However, as a result of the
purchase of the five warehouses at Leyton, the Company had the following
non-cancellable operating lease rentals receivable:
Company
2023 2022
£'000 £'000
Less than one year 1,097 974
Between one and five years 4,389 3,897
More than five years 17,831 16,805
23,317 21,676
28. Capital commitments
At 31 March 2023, the Group had entered into the following contractual
commitments:
- £427,000 in Momart comprising £292,000 for enhancements to
existing vehicles, £111,000 for two new vehicles, and £23,000 for IT
upgrades.
- £92,000 in PHFC for infrastructure replacement.
- £42,000 in FIC for the new retail sales system.
At 31 March 2022, the Group had entered into the following contractual
commitments:
- £385,000 at Momart comprising £272,000 for two new vehicles,
£79,000 for an HGV trailer and other enhancements to existing vehicles and
£34,000 for climate control systems.
- £270,000 in FIC comprising £190,000 for a new retail sales system
and £80,000 for a warehouse office.
29. Related parties
The Group has a related party relationship with its subsidiaries (see note 14)
and with its directors and executive officers.
Directors of the Company and their immediate relatives controlled 30.3% (2022:
30.3%) of the voting shares of the Company at 31 March 2023.
The compensation of key management personnel, which includes the FIH group plc
directors and the managing directors of the subsidiaries, is as follows:
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Key management emoluments including social security costs 1,010 1,317 600 943
Company contributions to defined contribution pension plans 47 41 9 -
Share-related awards 41 45 46 20
Total key management personnel compensation 1,098 1,403 655 963
At 31 March 2023, the Group's joint venture, SAtCO, has debtors of £498,000
due from its parent companies.
On 2 May 2017, KJ Ironside, the Managing Director of FIC, purchased a property
which had been built on approximately 510 square metres of land owned by FIC.
FIC provided a loan of £65,000 to Mr Ironside to purchase the freehold of
this land. The loan is to be repaid in full in the event of the sale of the
property, Mr Ironside ceasing to hold any permits or licenses required by law
in respect of his ownership or occupation of the property, him ceasing to be
employed by FIC at any time before his 65th birthday (unless due to ill
health) or his death. £650 of interest is payable each year by Mr Ironside to
FIC in respect of this loan.
FIH group plc key transactions with subsidiary entities:
2023 2022
£'000 £'000
FIC
Loan from subsidiary 10,257 10,057
Management fees charged annually 635 635
Momart
Loan to subsidiary (1,815) (1,630)
Management fees charged annually 120 120
PHFC
Loan to subsidiary (2,555) (2,555)
Management fees charged annually 240 240
30. Accounting estimates
The preparation of financial statements in conformity with adopted IFRS
requires management to make judgements, estimates and assumptions that effect
the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based upon
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of the
judgements as to asset and liability carrying values which are not readily
apparent from other sources. Actual results may vary from these estimates, and
are taken into account in periodic reviews of the application of such
estimates and assumptions. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that
period or in the period of revision and future periods if the revision affects
both current and future periods.
Defined benefit pension liabilities
At 31 March 2023, 11 pensioners were receiving payments from the FIC defined
benefit pension scheme, and there are three deferred members. A significant
degree of estimation is involved in predicting the ultimate benefits payment
to these pensioners using actuarial assumptions to value the defined benefit
pension liability (see note 23). Management have selected these assumptions
from a range of possible options following consultations with independent
actuarial advisers. There is a range of assumptions that may be appropriate,
particularly when considering the projection of life expectancy
post-retirement, which is a key demographic assumption, and has been based on
UK mortality data, if the life expectancy assumption was one more year than
the assumptions used, this would result in an increase of £80,000 in the
liability. Selecting a different assumption could significantly increase or
decrease the IAS19 value of the Scheme's liabilities. The projections of life
expectancy make no explicit allowance for specific individual risks, such as
the possible impact of climate change or a major medical breakthrough, the
projections used reflect the aggregate impact of the many possible factors
driving changes in future mortality rates.
The figures are prepared on the basis that both the FIC pension scheme and FIC
are ongoing. If the scheme were to be wound up, the position would differ, and
would almost certainly indicate a much larger deficit.
Inventory provisions
The Group makes provisions in relation to inventory value, where the net
realisable value of an item is expected to be lower than its cost, due to
obsolescence. Historically, the calculation of inventory provisions has
entailed the use of estimates and judgements combined with mechanistic
calculations and extrapolations reflecting inventory ageing and stock turn.
During the year ended 31 March 2023, inventory provisions increased to
£1,100,000 (2022: £1,089,000). Inventory greater than 12 months old and with
no sales in the twelve months before 31 March 2023 is provided against in
full. If this provision was reduced to 50% of the gross inventory value, the
provision would reduce by circa £174,000 2022: £169,000). If this
provision was extended to cover all inventory greater than six months old with
no sales in the twelve months before 31 March 2023, the provision would
increase by £117,000 (2022: £94,000).
Long term construction contracts
Significant estimation is involved in determining the revenue and profit to be
recognised on long term contracts. This includes determining percentage of
completion at the balance sheet date by estimating the total expected costs to
complete each contract along with their future profitability. These estimates
directly influence the revenue and profit that can be recognised on such
contracts.
Company Information
Directors Registered Office
Robin Williams Non-executive Chairman Kenburgh Court
Stuart Munro Chief Executive Officer 133-137 South Street
Reuben Shamu Chief Financial Officer Bishop's Stortford
Robert Johnston Non-executive Director Hertfordshire CM23 3HX
Dominic Lavelle Non-executive Director T: 01279 461630
Holger Schröder Non-executive Director E: admin@fihplc.com (mailto:admin@fihplc.com)
W: www.fihplc.com (http://www.fihplc.com)
Registered number 03416346
Company Secretary
AMBA Secretaries Limited
Stockbroker and Nominated Adviser
W.H. Ireland Limited
24 Martin Lane,
London EC4R 0DR
Solicitors
Shoosmiths LLP
1 Bow Churchyard
London EC4M 9DQ
Auditor
Grant Thornton UK LLP
103 Colmore Row,
Birmingham B3 3AG
Registrar
Link Group
10(th) Floor Central Square,
29 Wellington Street,
Leeds LS1 4DL
Financial PR
Novella Communications,
South Wing, Somerset House,
London WC2R 1LA
The Falkland Islands Company The Portsmouth Harbour Ferry Company Momart Limited
Adam Brown, Director
Kevin Ironside, Director T: 02392 524551 Alison Jordan, Director
T: 00 500 27600 E: admin@gosportferry.co.uk T: 020 7426 3000
E: info@fic.co.fk (mailto:info@fic.co.fk) W: www.gosportferry.co.uk (http://www.gosportferry.co.uk) E: enquiries@momart.com
W:www.falklandislandscompany.com (http://www.falklandislandscompany.com) W: www.momart.com (http://www.momart.com)
www.fihplc.com
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